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Report of the Directors

Your Directors have pleasure in presenting this Annual Report on the business and operations with audited accounts of your
company for the year ended March 31, 2010.
FINANCIAL RESULTS
Your Company’s financial performance for the year ended March 31, 2010 is summarized below:
(Rupees in Million)

Particulars 2009-2010 2008-2009


Net Income 20751.3 17475.7
Profit before Interest & Depreciation 2949.0 2675.2
Interest 555.0 896.4
Depreciation 882.7 762.1
Profit before non-recurring items 1511.3 1016.7
Non-recurring items — —
Profit before Taxation 1511.3 1016.7
Provision for Taxation (541.6) (391.8)
Profit after Tax available for appropriation 969.7 624.9
Appropriation
Dividend on Equity Shares (including Taxes thereon)
Interim dividend paid — 42.1
Final dividend proposed 100.7 42.1
Dividend on Preference Shares paid (including Taxes thereon) 86.7 86.7
Transfer to General Reserve 100.0 65.0
Balance your Directors propose to carry to the Balance Sheet 682.3 389.0

DIVIDEND
Your Board of Directors take pleasure in declaring a dividend of 36% for the year ended March 31, 2010.
Your Company paid a dividend on the Cumulative Redeemable Preference Shares (CRPS) at the rate of 3% under the terms of
the issue of the 24.69 million CRPS held by Scottish & Newcastle.

CAPITAL
The Authorized Share Capital of the Company remained unchanged at Rs.2,800 million, comprising Equity Share Capital of
Rs.300 million and Preference Share Capital of Rs.2,500 million. The Issued, Subscribed and Paid-up Share Capital as on March
31, 2010 stood at Rs.2,709 million, comprising of Equity Share Capital of Re.1 each aggregating to Rs.240 million and Cumulative
Redeemable Preference Shares of Rs.100 each aggregating to Rs.2,469 million.

ALLIANCE WITH HEINEKEN N.V.


As a result of the acquisition of Sctottish & Newcastle by Heineken, the effective ownership of 37.49% of Equity holding in
your Company now effectively vests in Heineken. Your Company has entered into a new Shareholders’ Agreement inter alia
with Heineken. A comprehensive business partnership with Heineken has been agreed, thereby formalizing their entry into your
Company as an equal promoter. The Parties have agreed upon key commercial terms for the production of ‘Heineken’ in India,
which will accelerate the growth of the premium beer segment throughout India. At the same time, your Company will work
with Heineken to expand the international presence of the ‘Kingfisher’ brand through Heineken’s global footprint.

MANAGEMENT DISCUSSION AND ANALYSIS


INDUSTRY OVERVIEW
The per capita consumption of beer in India continues to be very low compared to other countries. There has been a steady
growth in the Indian Beer Industry of about 15% per year in the last five years, with Industry volumes crossing 200 million cases
in financial year 2009-2010 from about 100 million cases in financial year 2003-2004. Considering the Indian demographics,
with around 70% of the population below the age of 30 years, growing income and increasing international influence, the
industry is expected to maintain if not exceed, its growth at present rate. While the Industry grew by 10% in volume terms
during the last financial year your Company’s volumes grew by 20%.
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Report of the Directors (contd.)
The Indian market infrastructure is a barrier to higher growth. In India, alcohol is available in around 65,000 outlets including
shops, bars and restaurants which translates to roughly one outlet for every 18,000 residents, whereas the global average
for the same is one outlet per 250 residents and the corresponding figure for China is one outlet for every 300 residents. For
instance, in urban conglomeration like Greater Mumbai, there are around 2,500 outlets while in Shanghai, which has similar
population base, the number of outlets selling alcohol is 18,000. An encouraging development is that in some cities, like
Mumbai, the government has started to issue licenses for outlets to sell beer and wine only, delinking it from the sale of spirits.
This development should facilitate future growth.
Taxation is another major factor which adversely affects the Indian brewing industry. In India, all alcoholic beverages are taxed
uniformly, irrespective of their alcohol content. Consequently, same rate of taxation is applied for spirits, lager beer, strong beer
and other alcoholic beverages, resulting in higher price for beer relative to high alcohol beverages. Across the globe, levies on
beer are typically at half the rate applicable to spirits, providing an incentive for consumers towards lower alcohol beverages.
Due to the prevalent excise taxation structure, the majority of Indians who consume alcohol prefer to purchase spirits over beer as
it contains higher alcohol at a similar price. Therefore in India, unlike most other countries, consumption of spirits is higher than
beer. Some States have recently started to delink beer taxation from spirits, thereby promoting a logical growth in the future.
Taxation & Regulation of alcohol being a State subject under the Constitution of India, each State has separate set of regulations,
restrictions and taxation structure for alcoholic beverages. Some States also impose high export duties and restrictions on the
export of beer outside the State. Even the sales & distribution structure varies from State to State as some markets are open
while in most States primary sale is canalized through State controlled corporations.
Over the last 5 years, a plethora of foreign brands have entered the country as 100% Foreign Direct Investment is permitted
thereby increasing the choice of brands and competition. All major global brewers are now present in India. Despite this, your
Company has been able to extend its market leadership position.

OPERATIONS
Volumes during 2009-2010 were buoyant in the Northern & Western markets, but sales in key Southern States were adversely
affected. A change in taxation structure in Karnataka and the voluntary withdrawal of your Company’s brands in the first
quarter of the year 2009-2010 from Andhra Pradesh, on account of a stand off on pricing between beer producers and the
State Government, impacted sales in these key markets.
Your Company has successfully commissioned its largest greenfield brewery with a capacity of 6 Lac HL per annum in the State of
Andhra Pradesh which became operational in January 2010. The greenfield brewery has been built to international specifications
and has adopted several international standards like HAZOP for safe operation, and HACCP, the worldwide standard for food
certification. The brewery has been built with a commitment to the environment and your Company has taken various steps
to reduce the overall carbon footprint. The latest equipment has been installed with a vision of productivity and environmental
conscience. In keeping with its new mantra, ‘Conserve, Connect & Conquer’, your Company’s unique environmental initiative
on inclusive water management, the plant design aims not just to deliver water consumption levels exceeding world class
standards, but also to maintain the water table levels and the greenery around the brewery. In view of production at enhanced
capacity at the new greenfield brewery and to achieve economies in scale of operation, the management has discontinued its
operations at its Hyderabad brewery.
Your Company received the prestigious Water Digest Award for the year 2009-2010 in the categories of Best Water Conserver
– Waste Water Management Company, and Corporate Social Responsibility for water practices supported by UNESCO, PHDCCI
and various Government of India agencies. The brewing unit of your Company at Palakkad has been awarded the State First
Prize for ‘Pollution Control and Environmental Protection’ among medium scale industries in Kerala for 2008. This is the third
consecutive year that the unit has received this coveted award. It earlier won the second prize in the same category in the year
2006 and the first prize in 2007.
Acquisition of land at Nanjangud, Karnataka through KIADB has been completed and your company will commence setting up
of a new brewery in this profitable State.
Your Company has shifted from furnace oil fired boilers to solid fuel boilers in most of its breweries, leading to savings in the
cost of fuel. To contain the increase in bottle cost, your Company has introduced dedicated design registered bottles in select
markets. We expect the benefits of this initiative materialising from the financial year 2010-2011.
Heineken owns breweries in Andhra Pradesh and Maharashtra. Your Company has now the benefit of utilization of capacity
available at these two breweries.

SALES
Your Company continues to lead the beer market with a sale of 101 million cases and combined national market share
crossing 50%. The net sales for the year 2009-2010 stood at Rs.19,975 million as against net sales of Rs.16,983 million in the
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Report of the Directors (contd.)
financial year 2008-2009, registering a growth of 18% over the comparable figure in the previous year. This spectacular result has
been achieved despite impasse in supply to the Andhra Pradesh market during peak season and excise increases in Karnataka. Your
Company has a market share that now stands at over 50%, and is twice the size of its nearest competitor. Your Company along
with its associates controls over 63% of the mild beer market and over 46% of the strong beer market in India. The ubiquitous
“Kingfisher” brand continues to be the largest selling beer brand in India while “Kingfisher Strong” has grown by 22%.
Region wise, the Northern market grew by 33% particularly due to growth in the States of Rajasthan and Uttar Pradesh. The
Eastern markets grew by 70% on account of high growth in the States of Bihar, Jharkhand, West Bengal, Orissa and North
Eastern States. The Southern markets grew by 7% as the growth in the States of Kerala and Tamil Nadu was offset by the
de-growth of Karnataka market and halting of sales in Andhra Pradesh. The Western markets grew by 19% riding on growth
in the States of Madhya Pradesh and Maharashtra and a decline in Daman & Diu.
Your Company has launched a new super premium brand by the name ‘Kingfisher Ultra’ which has been widely acclaimed in
the markets of its launch. Your Company has also launched an All Season beer by the name ‘Kingfisher Red’ in the North and
East markets. ‘Kingfisher Red’ is developed following a unique process and can be consumed even at 14 to 17 degrees Celsius,
without any change in the taste of beer.
The Brand ‘Kingfisher’ has been awarded the prestigious Gold Medal in the World Beer Championship 2009.

MANUFACTURING EXPENSES
Manufacturing expenses for the financial year 2009-2010 were Rs.10,088 million constituting 50.5% of the net sales as against
Rs. 8,693 million in the previous financial year which constituted 51.2% of the net sales.
A significant increase in price of second hand bottles on account of hoarding by bottle traders has adversely affected manufacturing
costs. Your Company has recently introduced patented bottles with a view to gain strategic control of this major item of cost.
Since the bottles are patented and the name and logo of your Company are embossed on the bottles, they cannot be used by
other brewers and are to be necessarily supplied back to your Company. The cost associated with accelerated investment in
new patented bottles is expected to be recovered by a drop in the price of second hand bottles.
Your Company has entered into long term agreements for securing supply of malt & barley thereby minimizing the fluctuation
in price of these ingredients.
Most of the units have installed solid fuel boilers which has resulted in a reduction of fuel cost. The breweries are continuously
improving efficiencies in the brewing process as well as in packing thereby reducing the manufacturing costs.

PERSONNEL AND OTHER OPERATING EXPENSES


Personnel expenses of your Company stood at Rs.989 million as compared to Rs.871 million in the previous year. This constituted
5% of the net sales as against 5.1% of the net sales in the previous year. Other operating expenses amounted to Rs.1,094
million constituting 5.5% of the net sales. Personnel and other operating expenses were contained despite increased volumes
during the year.

SELLING AND BRAND PROMOTION EXPENSES


During the period under review, your Company has spent 28% of net sales on selling and brand promotion exercise as compared
to 25.2% of net sales spent in the previous year.
During the year, your Company continued its investments in brand building, especially behind the Kingfisher Brand. Kingfisher
continues its high profile association with five of the eight IPL teams as their ‘Good Times Partner’. This association was effectively
leveraged both through communication as well as consumer and trade contacts.
Kingfisher further strengthened its association with football by signing on as the title sponsor of the Goa Professional League.
Kingfisher continued to leverage on the excitement and glamour of Formula-1 by being a very visible and prominent sponsor
of the Force India team.
Kingfisher also continued its association with large city-based sporting events such as the Mumbai Marathon, Delhi Half Marathon
and the World 10K race in Bangalore.
Kingfisher and fashion have been synonymous for over a decade. Kingfisher has strengthened its association with fashion by
being a key sponsor to the India Couture Week, Wills Lifestyle India Fashion Week and the Lakme Fashion Week, apart from
the fashion weeks in Kolkata, Chennai and Bangalore.
Music has been another significant platform that Kingfisher has used over the years. During the year, the pub-based rock festival
– ‘Kingfisher Pubrock Fest’ was extended to 20 cities and over 75 shows. The Kingfisher Voice of Goa talent hunt has grown
from strength to strength and has firmly entrenched Kingfisher extremely close to the hearts of Goans.
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Report of the Directors (contd.)
The eighth edition of the much awaited and world acclaimed ‘Kingfisher Swimsuit Calendar’ was released in January to a
tremendous response. Your Company’s association with India’s No.1 Lifestyle TV channel ‘NDTV Good Times’ continued into
its third year.
PROFIT BEFORE INTEREST, DEPRECIATION AND TAXATION (PBIDT)
PBIDT for the year under review stood at Rs.2,949 million as compared to Rs.2,675.2 million in the previous year, reflecting
an increase of 10.2%. This increase in PBIDT is resulting from strong revenue growth and sustained investment behind your
Company’s brands.

INTEREST AND DEPRECIATION


Interest paid during the year amounted to Rs.555 million as against Rs.896.4 million in the previous year. Depreciation for the
year was Rs.882.7 million as compared to Rs.762.1 million in the previous year.
There has been reduction in the interest cost as compared to the previous year due to exchange gains in the current year
compared to losses in the previous year and the payment of a term loan commitment fee in the previous year. Depreciation
has increased on account of continued investment in production capacities, including the investment in the greenfield
Andhra Pradesh brewery.

PROFIT BEFORE AND AFTER TAXATION


The Profit Before Taxation for the year stood at Rs.1,511.3 million as compared to Rs.1,016.7 million in the previous year
reflecting an increase of around 48.6%. The Profit After Taxation stood at Rs.969.7 million as against Rs.624.9 million in the
previous year reflecting a growth of 55.2%.

PROSPECTS
While multinational companies are expected to increase competition in the premium beer segment, established domestic brands,
particularly those of your Company have the advantage of having an established brand equity. Several international brewers
have currently built brand associations and are marketing their brands aggressively through various point-of-sale promotions
throughout their distribution networks. Your Company has the benefit of a strong route to market combined with India’s leading
brands.
A double digit growth rate is expected for the coming years, resulting from the increase in disposable income and the growth
of consumers entering the legal drinking age.
On-trade sales are expected to grow considerably with growing affluence among young consumers together with the culture of
frequenting pubs and clubs that is now spreading to second-tier cities. Off-trade sales are meanwhile expected to be boosted
by the gradual deregulation of beer retail through supermarkets/hypermarkets and beer & wine licenses.
In order to augment capacities in critical markets, expansion in Karnataka is expected to commence in the next financial year.

ENVIRONMENTAL INITIATIVES
Besides corporate social responsibility, water conservation has been our key focus area. Also, with the expected future growth,
its importance has considerably increased. Most of our units have a constraint on disposal of waste water, and therefore, the
Company has embarked upon a plan to install sophisticated equipment and modification process so as to reduce consumption
of water and its disposal. This will in turn reduce need for acquisition of additional lands for waste water disposal. As an
environmental initiative, your Company has installed bottle washers incorporating the latest technology at all units and is
encouraging rain water harvesting at these units. Your Company has also collaborated with several agricultural universities for
cultivation of identified crops with waste water from the Brewery being used for irrigation on a select basis.
Dry yeast recovery has also been earning revenue as an ingredient for probiotics, as a mixer with spent grain and pesticides.
Going ahead, as an environment friendly initiative, your Company is determined to focus on measures for reduction of process
loss during production, reduction of pollutants and other wastages and utilization of natural methods of root zone treatments
such as usage of duck weed / water hyacinth as an economical method for water purification. This is being done in addition
to reducing pollutants which will in turn reduce load on the effluent treatment facility and thereby assist in conservation of the
environment.

SOCIAL INITIATIVES
Social responsibility is integrated in the corporate philosophy of your Company and we have been able to positively impact
the lives of the communities that we work in. Primary Health, Primary Education and Water are the three key areas for our
interventions. Each initiative undertaken is long term and sustainable and addresses a specific need of the local community.
These are implemented and monitored in partnership with representatives of the community. Our teams work relentlessly to
ensure that each of these meet the needs of the local people. In Education, the objective is to ensure that quality education is
4
Report of the Directors (contd.)
imparted to children from the underprivileged strata of the society. Here your Company’s representatives work closely with local
schools to provide better infrastructure, mid day meals, stationery and uniforms as well as deployment of teachers to enhance
the quality of education. In primary health, your Company’s endeavour has been to ensure that the community has access to
primary healthcare. These are either in the form of Primary Health Centres set up by us or mobile health services where a qualified
doctor travels in an ambulance to villages that do not have primary health facilities. Your Company’s initiatives in water have
been to both conserve as well as provide potable water to the local community. These interventions have earned us the trust
and appreciation of the community, local bodies and Governmental agencies. Your Company’s initiatives in Primary Health in
7 locations have benefitted over 6000 people. In Education, the interventions have enhanced the quality of education for over
1000 students in 7 locations and we have been able to facilitate access to water for over 13000 locales in 6 locations.

INTERNAL CONTROL SYSTEM


Your Company has established a robust system of internal controls to ensure that assets are safeguarded and transactions are
appropriately authorized, recorded and reported. Internal Audit evaluates the functioning and quality of internal controls and
provides assurance of its adequacy and effectiveness through periodic reporting. Your Company’s internal control systems are
adequate and are routinely tested and certified by statutory and internal auditors. The process adopted provides reasonable
assurance regarding the effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable
laws and regulations.
In order to continuously upgrade the internal control system, to be in line with International best practices and to ensure
proper corporate governance, your Company has implemented risk assessment, control self assessment and legal compliance
management systems. These have been updated during the year under review.
The internal control system evaluates adequacy of segregation of duties and reliability of management information systems,
including controls in the area of authorization procedures and steps for safeguarding assets. Planned periodic reviews are carried
out for identification of control deficiencies and opportunities for bridging gaps with best practices along with formalization of
action plans to minimize risks.
Your Company believes that the overall internal control system is dynamic, and reflects the current requirements at all times,
hence ensuring that appropriate procedures and controls, in operating and monitoring practices are in place.
Internal Audit reports to the Audit Committee and recommends control measures from time to time.

OPPORTUNITIES & THREATS


With growing demand, the domestic production of beer is on the rise. With further investments, your company has been able
to upgrade and expand its capacities and also its brands. International brewers have established breweries across India in order
to extend their brand presence to more States. With these international brands starting domestic production in India, indigenous
brands such as your company’s face increasing competition. International premium lager is growing steadily (though on a smaller
base) as the companies have expanded their distribution across India, and have launched several new brands during the year
under review. Despite this influx of new entrants, Kingfisher Lager continues to not just maintain market share but indeed
increased it beyond 50% during the period under report.
India is predominantly a spirits market and beer is a minority preference for those who consume beverage alcohol. The low
penetration in beer consumption in comparison to international levels offers the expectation of substantial and sustainable
growth in demand for beer in years to come, particularly given the youthful age of India’s populace. It is expected that gradually
there will be a deregulation in the Indian beer industry too, giving it a boost.
Foreign brewers have been eyeing the Indian market for some years now as India is widely acknowledged to be the last untapped
big growth market. However, consistent investments by your Company, in the product, packaging and communication, along
with well established distribution, puts UB in a strong position, as seen by consistent improvements to the Company’s national
market share.
RISK MANAGEMENT
Your Company has evolved a framework for management of Business Risks. Towards this end the company has identified risk
categories under strategic risks, operative risks, information technology risks, financial risks. This is audited regularly by the
internal audit team.

Continuity and sustainability of the business is as important to stakeholders as growing and operating the business. Managing
risks and protecting the business from the effects of disasters, failures and reputational damage are focal points on the
management’s agenda.

RISKS AND CONCERNS


The Indian beer industry is plagued with myriad taxes & levies that vary from State to State. These along with price regulation,
inadequate market infrastructure and restrictions in interstate movement of beer, pose a great challenge for the industry.
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Report of the Directors (contd.)
Unlike most developed countries where beer is less regulated and available freely, high level of regulation and higher end
consumer price hampers beer sales in India.
Uniform tax regime for beer in all States will be a boon for the industry. If implemented, it will help the beer industry by rationalizing
end consumer prices in all States, as is in the case of other consumer goods. Globally, the policy of uniform taxation has been
a success because of inherent positive implications on Government revenue. In addition to economic contribution, a uniform
tax structure will also create increased agro linkages that are beneficial to a country like India.
It is important to realize that the beer sector can contribute immensely to the agricultural sector, as beer is an agro-based product.
Barley farmers particularly stand to benefit from the growth of the beer sector.
Additionally, the continuing control on pricing as exercised by a number of State Governments has resulted in our inability to raise
prices on roughly 60% of our sales. This has had a direct bearing upon the Company’s profitability. As this challenge continues
in the current financial year, it has resulted in a number of key markets becoming unattractive from a financial perspective.
Your Company has explored a variety of avenues to contain the risk of continued increase in basic costs and has entered into
a number of long term agreements for sourcing vital inputs. There has been a continuing review of the long term strategy for
procurement at an economical cost.
Excessive regulation and further extensions of Government intervention, in the areas of distribution and pricing, is affecting the
growth and profitability of the industry as well as restricting Government revenues. In addition, restrictions on advertising and
licensing of retail outlets continue to present challenges to the Industry.
Inclusion of alcoholic beverages into Goods and Service Tax (GST), is uncertain. Non-inclusion of alcoholic beverages in purview
of GST would be against the fundamental concept of GST and could have a material negative impact. However, even if it is
included there may be material negative impact on input cost.

HUMAN RESOURCES
People continue to be the focal point of the organization’s development. Your Company believes in building a stimulating,
conducive and transparent culture that drives high level of performance. For a high performance organization, it is imperative
that it has right people in the right job equipped with the right set of skills. As such, the emphasis this year was in identifying
and developing people capability to ensure that we not only maintain but accelerate our rate of growth and performance. With
this intent, an in-depth evaluation of role requirement vis a vis the individual’s strength was carried out. This was to ensure right
deployment of people and also identify their developmental needs that will strengthen and consolidate our leadership pipeline.
The organization also completed the succession planning exercise that has also enabled us to fill critical positions internally.
We continued to significantly improve our performance in the areas of productivity and safety by means of focused initiatives.
Your Company maintained harmonious employee relations during the year. The transition of workforce from the existing plant
to the new greenfield also happened seamlessly.
As on March 31, 2010, the total employee strength at United Breweries Limited stands at 1661. Your Directors place on record
their sincere appreciation to all employees for their contribution towards the continuous success of the organization.

SUBSIDIARY COMPANIES
Associated Breweries & Distilleries Limited remains a wholly owned Subsidiary of your Company while your Company holds
51% of equity in Maltex Masters Limited.
Your Company has received approval from the Central Government exempting your Company from attaching the Accounts
etc., of its subsidiaries viz. Associated Breweries & Distilleries Limited and Maltex Malsters Limited with the balance sheet of
your Company. In terms of the approval so granted by the Central Government, the Accounts, etc., of the above subsidiaries
are not required to be attached with the balance sheet of the holding company. However, these Accounts will be provided on
request to any member requiring to have a copy, on receipt of such request by the Company Secretary at the Registered Office
of the Company.
Statement pursuant to Section 212 (1) (e) also forms part of the Annual Report.

CONSOLIDATION
As per the Listing Agreement, Consolidated Accounts conforming to applicable Accounting Standards are attached to this
Annual Report.

DEPOSITORY SYSTEM
Your Company has entered into Agreement with National Securities Depository Limited and Central Depository Services (India)
Limited in accordance with the provisions of the Depositories Act, 1996 and as per the directions issued by Securities and
Exchange Board of India.
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Report of the Directors (contd.)
DIRECTORS
The Board of Directors of your company has been reconstituted and broad based to comprise of 12 Directors with a balanced
combination of Promoters and Independent Directors. Mr. John Hunt and Mr. John Nicolson opted out of the Board.
Mrs. Kiran Mazumdar Shaw and Mr. Madhav Bhatkuly have been inducted on Board as Independent Directors with effect from
October 26, 2009. Mr. Duco Reinout Hooft Graafland, Mr. Sijbe Hiemstra and Mr. Guido de Boer were inducted on Board with
effect from December 07, 2009. Mr. Stephan Gerlich was appointed to the board on July 02, 2010.
The Board places on record the contributions of outgoing Directors during their tenure on the Board of your Company.
Mr. Chugh Yoginder Pal, Mr. A K Ravi Nedungadi and Mr. Sunil Alagh retire by rotation at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment.

AUDITORS AND AUDITORS’ REPORT


M/s Price Waterhouse, Statutory Auditors hold office until the conclusion of the ensuing Annual General Meeting and are
eligible for re-appointment.
There are no qualifications or adverse remarks in the Auditors’ Report which require any clarification or explanation.

LISTING REQUIREMENTS
Your Company’s Equity Shares are presently listed at the Bombay Stock Exchange Limited, National Stock Exchange of India
Limited and the Bangalore Stock Exchange Limited. The listing fees have been paid to all the Stock Exchanges for the year
2010-2011.
During the year under review, the Securities of your Company have been delisted from Stock Exchanges at Chennai and New
Delhi upon application made in terms of special resolution passed by the members in this regard.

CASH FLOW STATEMENT


A Cash Flow Statement for the year ended March 31, 2010 is appended.

CORPORATE GOVERNANCE
A Report on Corporate Governance forms part of this Report along with the Certificate from the Company Secretary in practice.

FIXED DEPOSITS
The Company has not invited any Fixed Deposits.

PARTICULARS OF EMPLOYEES, CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ETC.:


Information in accordance with sub-Section (2A) of Section 217 of the Companies Act,1956, read with the Company’s (Particulars
of Employees) Rules, 1975, forms part of this Directors’ Report and is annexed. Particulars required under Section 217(1)(e) are
also annexed.

DIRECTORS RESPONSIBILITY STATEMENT


Pursuant to Section 217(2AA) of the Companies Act, 1956, your Board of Directors report that:
– in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper
explanation relating to material departures, if any.
– accounting policies have been selected and applied consistently and that the judgements and estimates made are reasonable
and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of
the profit of the Company for that period.
– proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud
and other irregularities.
– the annual accounts have been prepared on a going concern basis.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the continued support received from shareholders, banks and
financial institutions. Your Directors are also grateful to the Company’s business partners and customers for their continued
support and patronage. Finally, your Directors wish to acknowledge the support and contribution on the part of all employees
who constitute our most valuable asset.

By Authority of the Board,

Bangalore Kalyan Ganguly Guido de Boer


July 21, 2010 Managing Director Director & CFO
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Annexure to Directors’ Report
STATEMENT UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
A. Conservation of Energy
Energy conservation measures taken by the Company:
Electrical Energy
– Vapour absorption machine is being commissioned at Bangalore unit for generating chilled water for wort cooling instead
of using high electricity consuming reciprocating compressors.
– Draft control on alternate fuel boilers installed to reduce electricity consumption at Palakkad, Orissa & Mangalore units.
– Lighting energy savers installed at Mumbai, Bangalore & Mangalore units.
– Focus on optimal work in process during the off season has reduced refrigeration load and consequently saved on energy
consumption.
– Installed variable frequency drives in Mumbai on high load motor to reduce energy consumption.
– De-superheaters in Refrigeration compressor installed at Bangalore, Kalyani & Palakkad units to reduce electricity
consumption.
– Chilled water generation through CO2 evaporation implemented at Mumbai to reduce electrical consumption.

Fuel Oil Consumption


– De-superheaters installed at Bangalore, Palakkad and Kalyani units to generate higher feed water temperature in boilers
leading to reduced solid fuel consumption.
– After successful implementation of alternate fuel boilers at units located at Punjab, West Bengal and Andhra Pradesh,
alternate fuel boilers are installed at all units except at Cherthala and Goa. This has reduced fuel cost substantially.
Water Conservation
– Recycling of effluent treated water with programmable logic control operated reverse osmosis plant installed at Mallepally,
and Ludhiana units to ensure water conservation.
– Rainwater harvesting initiative is being undertaken at Mallepally unit in a phased manner to save water and enhance
the ground water table.
Environment
– LED coupled with solar power & geo thermal office cooling system installed at Mallepally unit. Vapor Heat recovery
systems are installed at Mumbai & Mallepally units.
– Heat recovery system installed in Mumbai to reduce fuel consumption and reduce heat emission into the atmosphere.
This has a positive impact on reduction in global warming.
– Commissioned CO2 recovery plant at all units. This has reduced release of green house gases into atmosphere.

B. Technology Absorption
– First Mash filter & high speed 36000 BPH bottling line commissioned at Mallepally unit in Andhra Pradesh.
– Coil cooler installed for Diesel Generator (DG) sets at Mallepally unit in place of Radiators to increase efficiency of DG
sets during longer running hours at high temperature regions.
– Latest technology in labellers, Auto PU controlled Pasteurizer and fillers for beer packaging has been implemented at
Mallepally. This has resulted in improved quality, reduced wastages and higher productivities on the line.
– Double Evacuation Filler commissioned in Cherthala unit.
– Automation and Auto Blowdown installed in the boilers on selective basis.

C. Research and Development


The Company has continued its Research & Development (R&D) programme in the area of development of two row malting
variety of Barley. The Company is expecting to shortly launch a flavoured beer in the market by utilizing the technology
developed by our R&D department.

D. Foreign Exchange Inflow and Outflow (Rs. in Million)


Foreign Exchange earned : 9.42
Foreign Exchange used : 738.30
8
Annexure to Directors’ Report (contd.)
STATEMENT UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES
(PARTICULARS OF EMPLOYEES) RULES, 1975 (EMPLOYED FOR FULL YEAR)

Sl. Name Age Date of Total Designation Educational Experience Previous Employment
No. Joining Remuneration Qualifications in Years
1 K Ganguly 59 1-Feb-79 33876106 Managing Director B.A. (Hons.), 37 EVP - Marketing & Sales
PGDBM (XLRI) McDowell & Co. Ltd.
2 Shekhar Ramamurthy 49 15-May-89 18910553 Dy. President B.Tech. (Civil) - IIT, Delhi, 23 General Manager - Marketing
PGDBM - IIM - Kolkata Herbertsons Ltd.
3 Cedric Vaz 51 15-May-06 9404063 EVP - Manufacturing B.Tech. (Chem. Engg.), 28 Head Operations –
IIT - Kanpur Cadbury India Ltd.
4 J Noronha 55 15-Jul-91 8651142 EVP - Human Resources B.Com. (Hons.) PGDPM-IR 30 Personnel Manager –
(XLRI) The Oberoi Bogmalo Beach, Goa
5 Perry Goes 45 14-Jun-04 7603786 SVP - MIS, Strategic B.E. (Mech.), PGDBM 23 Group Leader for Business Analytics –
Planning & Business (Mktg-Fin & HR) - Goa Honeywell Technologies Solutions Labs
Analysis Inst. of Mgmt.
6 Sudhir Jain 50 15-Jan-04 4529166 DVP - Operations - South B.E. (Mech.) 24 G M Plant Operations –
& West University of Roorkee Pepsico India Holdings P. Ltd.
7 Kiran Kumar 42 28-Apr-97 7489206 SVP - Sales B.Com., PGDBM 19 Marketing Manager –
IIM - Ahmedabad Herbertsons Ltd.
8 Vivek Agnihotri 40 01-Mar-09 3082756 GM-Instl. Sales & B.Com., MBA (Marketing) 15 Kingfisher Airlines Ltd.
Customer Mktg.
9 Umesh Hingorani 41 2-Feb-93 4191295 DVP - Business BBA - University of 17 Marketing Manager –
Development Southern California Castle Breweries Ltd.
10 R K Jindal 49 19-Mar-85 4925478 DVP - Operations North & B.Com., F C A 25 First Employment
East and Malting
11 Govind Iyengar 43 5-Feb-01 5047026 DVP - Legal & B.Com., L.L.B., ACS 20 Company Secretary –
Company Secretary Citurgia Biochemicals Ltd.
12 Govind Tiwari 58 12-Feb-75 5304010 DVP - UBL Goa & B.Sc., PGDIFAT, DBA, 40 Asst. Brewer – Indo Lowenbrau
Contract Units PGDM & IR Breweries Ltd., Faridabad
13 Sharad Dalmia 45 1-Feb-01 3629681 DVP - Engineering B.E. (Mech.), PGDM 23 General Manager –
& Projects (Mech. & Elec. Engg.) McDowell & Co. Ltd.
(Jamshedpur Tech. Inst.)
14 George Paul 46 6-Jan-03 3775894 AVP - UBL Rajasthan B.Tech. (Mech.), MBM 22 General Manager –
(Asian Inst. of Mgmt.) A W Faber Castel (I) Pvt. Ltd.
15 R Santosh Kumar 45 1-Jul-98 4835879 DVP - Commercial B.E., PGDCA 22 Mfg. Manager – Pepsico India Holdings
16 Samrat Chadha 37 2-May-97 3673183 General Manager, Sales B.Sc., PGDM 13 First Employment
- West (T.A. Pai Mgmt. Inst.)
17 Gurpreet Singh 35 20-Apr-98 3544549 General Manager - B.Com., PGDM 12 First Employment
Marketing (T.A. Pai Mgmt.Inst.)
18 M R Srinivasan 58 15-Jul-89 3135187 AVP - UBL Mangalore B.Sc., MSW 36 Personnel Executive - Indl. Relations &
(University of Mysore) Welfare – Cipla Ltd.
19 P A Poonacha 39 1-Jul-96 4241712 AVP - Finance B.Com., ACA, AICWA 15 Accounts Executive –
BPL Sanyo Technologies Ltd.
20 R Raghupathy 50 10-Jul-89 3349725 General Manager - B.Com., AICWA 27 Accounts Executive –
Corporate Accounting Laurel Aromatics Pvt. Ltd.
21 P L Murugappan 39 27-Sep-97 3409282 General Manager - B.Sc., MBA (Fin.), AICWA 18 Head Finance–Cipla Ltd. (Bangalore Unit)
Finance
22 Jayant Basu 58 11-May-98 3491441 AVP - UBL Kalyani B.Sc., PGDPMIR, LLB, MBA 36 Plant Manager – Pfizer Ltd.
23 S Ramakrishnan 50 1-Jun-95 3882606 AVP – IT M.Com., 25 Senior Manager - Systems –
Dip. in Comp. Sc. McDowell & Co. Ltd.
24 Susheel Kumar 58 19-Apr-02 2931639 AVP - UBL Nelamangala B.Sc., Tech., Bio Engg. & 33 Chief Executive –
PGDMM Empee Breweries Ltd.
25 Rakesh Chandra 41 1-Jun-04 3058102 AVP - UBL Mumbai B.E. (Mech.), MFM, 18 Senior Manager - Projects –
Gupta Master in SAP-PS, MDP Birla Management Corporation
26 C Gouri Sankar 44 14-Mar-07 3136132 AVP - Srikakulam B.E. (Mech.), Adv. Dip. in 21 Senior Manager - Production –
Business Admn. Asian Paints (I) Ltd.
27 A K Das 56 14-Jan-81 2716744 AVP - Aurangabad M.Com. 31 Indo Lowenbrau Breweries Ltd.
28 A V Ganesh Ramu 49 01-Mar-83 2449750 General Manager – B.Sc., PGD Business Mgmt. 27 First Employment
Brewing & Technical Masters in Brewing - UK
29 A Narayanan 43 03-Nov-93 2573604 General Manager-Chennai B.Tech. ME., EGMP (IIM-B) 20 Skol Brewries Ltd.
30 Nirmal Rajani 47 01-Jun-98 2494732 General Manager Sales B.Com. 27 McDowell & Co. Ltd.
- South

9
Annexure to Directors’ Report (contd.)
31 Shyamlal Mittal 50 02-May-01 2564511 General Technical M.Sc. (Micro Biology) 27 Shaw Wallace & Co. Ltd.
Manager
32 Prem Korah 36 20-May-04 2455282 General Marketing B.E. (Electronics), MBA 10 Cavincare Pvt. Ltd.
Manager (XIMB)
33 Madhusudhan 39 01-Jul-05 2764484 AVP - Projects B.E., MBA 15 G M R Beverages & Industries Ltd.
Sharma
34 Ajay Jairath 46 09-Jan-07 2563912 General Manager - B.Tech. (Chem. Engg.) 23 International Packaging
UBL Ludhiana MBDA (Intl. Marketing) Products Pvt. Ltd.
35 Ramakrishnan S 46 22-Jan-07 3056879 AVP - UBL Palakkad B.E. (Chem. Engg.) PGDM 23 Organics Aromatics Pvt. Ltd.
36 Eswar Van Sharma 41 06-Mar-08 2804086 General Manager - B.E. (Civil & Environmental 16 McCann Erickson
Innovation Engg.) PGDM (XIM)
Employed for part of the year and in receipt of remuneration in aggregate of not less than Rs. 24,00,000/- per annum
1 Guido de Boer* 38 01-Oct-09 6989448 Director & CFO M.Sc., Economics & 13 Heineken International B.V.
Business
2 Ravikanth Sabnavis 41 12-Mar-07 2730898 DVP - Marketing B.E., MMS 18 Marketing Manager, Heinz India Pvt. Ltd.
3 Samar Singh 44 09-Nov-09 2634407 SVP - Marketing B.A. MBA (Marketing) 20 Spencers Retail Ltd.
Shekhawat

All the employees mentioned above are in full time employment with the Company.
AVP – Assistant Vice President, DVP – Divisional Vice President, SVP – Senior Vice President, EVP – Executive Vice President, CFO – Chief Financial Officer.
*Mr. Guido de Boer was appointed as Director & CFO effective December 7, 2009.
NOTES:
s 2EMUNERATIONSHOWNABOVEINCLUDESSALARY ALLOWANCE MEDICAL LEAVETRAVELEXPENSESANDMONETARYVALUEOFPERQUISITESASPER)NCOME4AX2ULES.ONEOF
the employees mentioned above is a relative of any Director of the Company except Mr. Umesh Hingorani, who is related to Dr. Vijay Mallya. None of the
above mentioned employees holds more than 2% of the paid-up equity capital in the Company.

By Authority of the Board,

Bangalore Kalyan Ganguly Guido de Boer


July 21, 2010 Managing Director Director & CFO

“Persons constituting group coming within the definition “group” for the purpose of Regulation 3(1)(e)(i) of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 include the
following:”
Dr. Vijay Mallya
Mr. Sidhartha V Mallya
Ms. Ritu Mallya
Kamsco Industries Private Limited
The Gem Investment & Trading Company Private Limited
Mallya Private Limited
McDowell Holdings Limited
United Breweries (Holdings) Limited
Pharma Trading Company Private Limited
Vittal Investments Private Limited
Devi Investments Private Limited
VJM Investments Private Limited
Scottish & Newcastle India Limited
Heineken International B.V.
Heineken N.V.
Scottish and Newcastle India Private Limited

10
Report on Corporate Governance
A. MANDATORY REQUIREMENTS

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE


As manifested in the Company’s vision United Breweries Limited has always strived for excellence in Corporate Governance.
Beyond mere compliance we are committed towards taking all strategic initiatives to enhance Shareholders’ wealth in the long
term. In pursuit of corporate goals, the Company accords high importance to transparency, accountability and integrity in its
dealings. Our philosophy on Corporate Governance is driven towards welfare of all the Stakeholders and the Board of Directors
remains committed towards this end.
The Board of Directors supports the broad principles of Corporate Governance and lays strong emphasis on its role to align and
direct the actions of the Company in achieving its objectives.

BOARD OF DIRECTORS
Your Company is managed and controlled through a professional Board of Directors. The Board comprises of a balanced
combination of non-Executive and independent Directors in addition to the Managing Director and Chief Financial Officer. Your
Company’s Board consists of eminent persons with considerable professional expertise and experience.
Matters of policy and other relevant and significant information are regularly made available to the Board. In order to ensure better
Corporate Governance and transparency, the Company has constituted an Audit Committee, Investors’ Grievance Committee,
Remuneration / Compensation Committee and Share Transfer Committee to look into the aspects of each Committee. Internal
Audit carried out by the Group Internal Audit team commensurate with the size of the organization. There is comprehensive
management reporting systems involving the preparation of operating results and their review by senior management and by
the Board.
In addition to securing Board approvals for various matters prescribed under the Companies Act, 1956, matters such as annual
budget, operating plans, significant and material show cause notice and demands, if any, minutes of Committee meetings,
control self assessment, risk management and updates thereof are regularly placed before the Board.
During the financial year ended on March 31, 2010, 6 Board Meetings were held on April 09, 2009, April 28, 2009,
July 23, 2009, October 26, 2009, December 07, 2009 and January 22, 2010.

ATTENDANCE AT BOARD MEETINGS AND ANNUAL GENERAL MEETING (AGM)

Number of Attendance at the


Number of Board
Names of the Directors Category Board Meetings last AGM held on
Meetings held
attended 10.09.2009

Dr. Vijay Mallya Chairman (NE) 6 5 YES

Mr. Kalyan Ganguly Managing Director 6 6 YES

Mr. A K Ravi Nedungadi Director (NE) 6 5 YES

Mr. John Hunt* Director (NE) 6 1 YES

Mr. John Nicolson* Director (NE) 6 1 —

Mr. Guido de Boer** Director (CFO) 6 2 —

Mr. Chugh Yoginder Pal Director (NE, Ind) 6 5 YES

Mr. Sunil Alagh Director (NE, Ind) 6 6 YES

Mr. Chhaganlal Jain Director (NE, Ind) 6 6 YES

Ms. Kiran Mazumdar Shaw# Director (NE, Ind) 6 2 —

Mr. Madhav Bhatkuly# Director (NE, Ind) 6 2 —

Mr. Sijbe Hiemstra** Director (NE) 6 1 —

Mr. Duco Reinout Hooft Graafland** Director (NE) 6 1 —

Mr. Stephan Gerlich@ Director (NE, Ind) 6 — —

Notes: NE – Non-Executive, Ind – Independent, CFO – Chief Financial Officer


11
Report on Corporate Governance (contd.)
# Ms. Kiran Mazumdar Shaw and Mr. Madhav Bhatkuly have been appointed as non-executive Directors in independent
capacity with effect from October 26, 2009.
* Mr. John Hunt and Mr. John Nicolson have resigned from the Board with effect from December 07, 2009 in view of
reconstitution of the Board of Directors of the Company.
** Mr. Sijbe Hiemstra and Mr. Duco Reinout Hooft Graafland have been appointed as non-executive Directors on the Board of
the Company with effect from December 07, 2009. Mr. Guido de Boer was appointed as Director & CFO with effect from
December 07, 2009.
@ Mr. Stephan Gerlich has been appointed as non-executive Director in independent capacity with effect from July 02, 2010.

MEMBERSHIP IN BOARDS AND BOARD COMMITTEES – OTHER THAN UNITED BREWERIES LIMITED (UBL)

Membership in Board Committees other than UBL


Membership in
Names of the Prescribed for reckoning the Other Committees not so
Boards
Directors limits under Clause 49 of the prescribed ***
other than UBL
Listing Agreement **

Dr. Vijay Mallya 21 NIL 1 (Chairman of 1 Committee)

Mr. Kalyan Ganguly 6 2 (Chairman of 2 Committees) 2 (Chairman of 2 Committees)

Mr. A K Ravi Nedungadi 9 5 (Chairman of 1 Committee) 2

Mr. Sijbe Hiemstra 1 NIL NIL

Mr. Duco Reinout Hooft 1 NIL NIL


Graafland

Mr. Chugh Yoginder Pal 4 4 (Chairman of 3 Committees) 2

Mr. Sunil Alagh 4 1 (Chairman of 1 Committee) 2

Mr. Chhaganlal Jain 7 4 (Chairman of 1 Committee) 3

Mr. Guido de Boer NIL NIL NIL

Ms. Kiran Mazundar 8 1 1


Shaw

Mr. Madhav Bhatkuly 3 1 NIL

Mr. Stephan Gerlich 2 1 2 (Chairman of 2 Committees)

The above position is as on the date of this Report and in respect of their Directorships only in Indian Companies.
** Audit & Investors’ Grievance Committees *** Remuneration, Share Transfer & Other Committees
NOTES:
a. Out of 21 other Companies in India in which Dr. Vijay Mallya is a Director, 8 are Private Limited Companies and 2 are Section
25 Companies. Dr. Vijay Mallya is also on the Board of 36 Overseas Companies.
b. Out of 6 other Companies in which Mr. Kalyan Ganguly is a Director, 1 is a Private Limited Company. Mr. Kalyan Ganguly is
also on the Board of 1 Overseas Company.
c. Out of 9 other Companies in which Mr. A K Ravi Nedungadi is a Director, 3 are Private Limited Companies and 1 is a Section
25 Company. Mr. A K Ravi Nedungadi is also on the Board of 9 Overseas Companies.
d. Mr. Sijbe Hiemstra is a director in 1 Private Limited Company. Mr. Hiemstra is also on the Board of 22 Overseas Companies.
e. Mr. Duco Reinout Hooft Graafland is a director in 1 Private Limited Company. Mr. Hooft Graafland is also on the Board of
1 Overseas Company.
f. Out of 4 other Companies in which Mr. Chugh Yoginder Pal is a Director, 1 is a Private Limited Company.
g. Out of 4 other Companies in which Mr. Sunil Alagh is a Director, 2 are Private Limited Companies.
h. Out of 7 other Companies in which Mr. Chhaganlal Jain is a Director, 1 is a Private Limited Company.
i. Out of 8 other Companies in which Ms. Kiran Mazumdar Shaw is a Director, 4 are Private Limited Companies. Ms. Mazumdar
is also on the Board of 3 Overseas Companies.
j. Out of 3 other Companies in which Mr. Madhav Bhatkuly is Director, 2 are Private Limited Companies. Mr. Bhatkuly is also
on the Board of 2 Overseas Companies.
12
Report on Corporate Governance (contd.)
PROFILE OF NEW DIRECTORS
Other Directorships & Committee
Brief resume
Memberships in India
Ms. Kiran Mazumdar Shaw Other Boards
Ms. Kiran Mazumdar Shaw, is a first generation entrepreneur with more than 32 Biocon Limited
years experience in the field of biotechnology. After graduating in B.Sc. (Zoology Syngene International Limited
Hons.) from Bangalore University in 1973, she completed her post-graduate Clinigene International Limited
degree in malting and brewing from Ballarat College, Melbourne University in Biocon Biopharmaceuticals Private Limited
1975. She has been awarded with several honorary degrees including Honorary Biocon Research Limited
Doctorate of Science from Ballarat University, in recognition of pre-eminent Glenloch Properties Private Limited
contribution to the field of Biotechnology, 2004, Doctor of Technology from
Narayana Institute For Advance Research
the University of Abertay Dundee, 2007, Doctor of Science from the University
Private Limited
of Glasgow, 2008 and Doctor of Science from the Heriot-Watt University,
Edinburgh, 2008. Narayana Hrudayalaya Private Limited
She is a founder promoter and has led Biocon Limited since its inception in Investors’ Grievance Committee
1978. She is the recipient of several awards, the most noteworthy being the
’Padmabhushan’ Award (one of the highest civilian awards in India) in 2005 Biocon Limited
conferred by the President of India, the Nikkei Asia Prize, 2009 for Regional
Growth, Express Pharmaceutical Leadership Summit Award 2009 for Dynamic
Entrepreneur, the Economic Times ‘Businesswoman of the Year’, the ‘Veuve
Clicquot Initiative for Economic Development For Asia’, Ernst & Young’s
Entrepreneur of the Year Award for Life Sciences & Healthcare, ‘Technology
Pioneer’ recognition by World Economic Forum and The Indian Chamber of
Commerce Lifetime Achievement Award. She heads several biotechnology task
forces including the Karnataka Vision Group on Biotechnology, an initiative by
the Government of Karnataka and the National Taskforce on Biotechnology for
the Confederation of Indian Industry (CII). She is a member of the Prime Minister’s
Council on Trade and Industry and also serves as a Member, Governing Body
and general Body of the Indian Pharmacopoeia Commission, an Autonomous
Body of the Government of India.
Mr. Madhav Bhatkuly Other Boards
Mr. Madhav Bhatkuly has a Masters Degree in Commerce from Sydenham Motilal Oswal Financial Services Limited
College, Bombay and a Masters Degree in Economics from the London School of New Horizon Financial Research Private
Economics. He is a recipient of the Foreign and Commonwealth Scholarship from Limited
the British Government. Mr Bhatkuly was a country partner of Arisaig Partners New Horizon Wealth Management
from 1999 to 2005. Prior to that, he was associated with SG Securities and ICICI Private Limited
Bank Limited. He partnered with Chris Hohn of The Children’s Investment Fund,
(UK) TCI to set up a dedicated India Fund. He is credited to have been amongst Audit Committee
the first institutional investors in many small companies which have gone on Motilal Oswal Financial Services Limited
to become some of India’s leading names. He has been featured on several
TV shows including “CNBC’s wizards of Dalal Street”, Indianomics, the Karan
Thapar Show etc., and has been invited to speak at many business schools such
as the Indian Institute of Management, and by many organizations such as the
Confederation of India Industries (CII), Goldman Sachs etc.
Mr. Duco Reinout Hooft Graafland Other Boards
Mr. Duco Reinout Hooft Graafland studied Business Administration at the Millennium Alcobev Private Limited
Erasmus University in Rotterdam and finished the Post-Graduate study for
Chartered Accountant. He started his career as a Management Trainee with
Heineken Nederland in 1981, became brand manager for Vrumona, Heineken’s
soft drink company and continued as Area Export Manager for Central and West
Africa. The experience with the African market prompted his move to Kinshasha,
where he worked as Financial Director for Heineken’s operations for three years
from 1987-1989. Then Rene returned to the Netherlands as Marketing Director
for Heineken Nederland. In 1993 he went to Indonesia as President Director
of Multi Bintang. As of 1997 he continues his career at Heineken’s Corporate
Office as Director Corporate Marketing to become Director of Heineken Export
Group in 2001. In 2002 he was appointed Member of the Executive Board and
CFO Heineken N.V.

13
Report on Corporate Governance (contd.)
Mr. Sijbe Hiemstra Other Boards
Mr. Sijbe Hiemstra has Bachelor’s degree in Business Administration at the School Millennium Alcobev Private Limited
of Higher Economic Studies, Rotterdam and has attended various International
Management programmes. Mr. Hiemstra joined Heineken in 1978. The first six
years he worked with Gedistilleerd en Wijngroep Nederland. He started in various
commercial and logistic projects, culminating in Product, Brand and Category
Manager. In 1985 he was appointed Export Manager Softdrinks with Heineken
Export Department/Vrumona. In 1989 Mr. Hiemstra started his overseas career as
Country Manager of Heineken Export in Seoul, South Korea. This was followed
by several years as Commercial Manager with South Pacific Holdings in Papua
New Guinea and as General Manager of Brasseries de Bourbon in ILLe de La
Reunion. In 1995 he returned to the Netherlands to take up the position of
Deputy Director Central Africa for Heineken’s Africa/Middle East Cluster. In 1998
he was appointed Regional Director SEA/Oceania with Asia Pacific Breweries
Ltd in Singapore. In 2001 he became Director of Heineken Technical Services in
Zoeterwoude. In October 2005 he was appointed Regional President.

Mr. Guido de Boer Other Boards


Mr. Guido de Boer has a Masters Degree in Economics and Business from Nil
Erasmus University Rotterdam. He has completed various Executive Development
Programs at INSEAD-Fontainebleau and IMD-Lausanne. He started his career in
investment banking, ultimately as Director at MeesPierson Corporate Finance
& Capital Markets, advising corporations on M&A and Equity Capital Markets
transactions in the Food & Beverages and Media Industries. In 2004, he joined
Heineken’s Group Business Development department where he was involved
in acquisitions, business due diligence projects, and business development
strategy. Mr. De Boer led the Heineken deal team in the public offer for Scottish
& Newcastle, in consortium with Carlsberg, for an enterprise value in excess of
EUR 15 bn. Having worked on acquisition and business due diligence projects in
countries like Russia, Colombia, Nigeria and China, he brings the experience of
a finance professional, possessing broad business skills, and an understanding
of diverse emerging markets.

Mr. Stephan Gerlich Other Boards


Mr. Stephan Gerlich is a Wirtschaftassistent from Industrial Chambers of Bayer CropScience Limited
Commerce, Koeln Germany. He is Country Group Speaker for the Bayer Group
Bayer MaterialScience Private Limited
in India and Vice Chairman and Managing Director of Bayer CropScience Limited
and Chairman & Managing Director of Bayer MaterialScience Private Limited.
Based at the headquarters in Mumbai, Mr. Gerlich has been responsible for the Investors’ Grievance Committee
Bayer Group business activities in India since July 2003. Mr. Gerlich started his
career with Bayer in 1978 and shortly afterwards moved to a subsidiary in France. Bayer CropScience Limited
After 3 years in France, he joined the Bayer operations in Mexico. In 1991, Mr.
Gerlich returned to the Bayer Headquarters in Leverkusen, Germany as Regional
Marketing Manager for Engineering Plastics Division and later designated as
Global Marketing Manager in 1992. In 1994, Mr. Gerlich took over as Director
Sales and Marketing and Key Account Manager in Bayer France and in 1995
he was made President / CEO of the Bayer / Hoechst Joint Venture, Dystar, in
Mexico. In 2000, he became Vice President in charge of sale in USA & Canada
for Dystar, based in North Carolina.

Mr. Chugh Yoginder Pal, Mr. Sunil Alagh and Mr. A K Ravi Nedungadi retire at the ensuing Annual General Meeting and
being eligible, have offered themselves for re-appointment. Brief particulars of Mr. Chugh Yoginder Pal, Mr. Sunil Alagh and
Mr. A K Ravi Nedungadi are mentioned below:
14
Report on Corporate Governance (contd.)
PROFILE OF DIRECTORS RETIRING BY ROTATION

Other Directorships & Committee


Brief resume
Memberships

Mr. Chugh Yoginder Pal Other Boards


Mr. Chugh Yoginder Pal is a Graduate in Engineering with First Class (Distinction) Cadbury India Limited
from Delhi University. He started his career at TELCO in 1958 & was trained in Aptech Limited
Industrial Engineering after which he moved to Hindustan Lever Limited in 1960, Sriram Pistons & Rings Limited
where he held various positions starting as an Industrial Engineer & moving up Renfro India Private Limited
quickly in the Management hierarchy in a variety of Production, Factory and
General Management roles and was the head of Corporate Materials Management
(1975-1977). He then joined Cadbury India Limited & held various positions as Audit Committee
Technical Director (1977-1982), Managing Director (1983-1987), Chairman & Cadbury India Limited (Chairman)
Managing Director (1987-1994), Executive Chairman (1994-1997); He continues Aptech Limited (Chairman)
to be the Chairman (Non-Executive) at Cadbury India Limited.
Sriram Pistons & Rings Limited
Mr. Pal brings with him great expertise & understanding of the Indian business
Investors’ Grievance Committee
environment. Mr. Pal is on the Board of UBL since April 29, 2005.
Cadbury India Limited (Chairman)

Mr. Sunil Alagh Other Boards


Mr. Sunil Alagh is Chairman of SKA Advisors, a Business Advisory / Consultancy GATI Limited
firm with a focus on Marketing and Brand building strategies. He is a graduate in Indofil Organic Industries Limited
Economics (Hons.) with MBA from IIM Calcutta. He has worked with ITC Limited, Tamara Capital Advisors Private Limited
Jagatjit Industries Limited and Britannia Industries Limited. He was Managing SKA Advisors Private Limited
Director and CEO of Britannia Industries Limited from 1989 to 2003. During this
tenure, Britannia figured in the Forbes Magazine list of 300 Best Small Companies
in the world for 3 years. It also became the Number 1 Food Brand in India. Investors’ Grievance Committee
He is a member of the Indian Advisory Board of Schindler and on the Governing Indofil Organic Industries Limited
Body of IIM Bangalore & Indore, National Institute of Design, Ahmedabad and the
Indian Institute of Foreign Trade, Delhi. In addition, he is a member of the Round
Table on Higher Education of the Ministry of HRD, Government of India.
He was honoured with the ‘Gold Medal Kashlkar Memorial Award 2000’ for
outstanding contribution to the food processing industry in India. He was a finalist
for the Ernst and Young Entrepreneur of the Year Award, 2002.
Mr. Alagh is on the Board of UBL since April 29, 2005.
Mr. A K Ravi Nedungadi Other Boards
A trained Chartered Accountant, Mr. Nedungadi set early academic records by Aventis Pharma Limited
qualifying in the final of the Chartered Accountancy Exam at age 20. Early position Bayer CropScience Limited
at Macneill & Magor Ltd., a diversified conglomerate and Pentagon Fasteners Ltd. Kingfisher Airlines Limited
Delhi set the stage for an outstanding track record with current employer. Idea Streamz Consultants Private
He joined the UB Group in 1990 as the Corporate Treasurer. Within two years, he Limited
was transferred to London as Group Finance Director of the Group’s international Pie Education Limited
business managing the businesses of UB International, which included the paint Millenea Vision Advertising (P) Limited
giant Berger Jenson and Nicholson, spanning 27 countries. He was instrumental Millennium Alcobev Private Limited
in listing the Berger group companies on London and Singapore bourses. Shaw Wallace Breweries Limited
Since his appointment as the President and Group CFO in 1998, the youngest to
Audit Committee
have been elevated to such a position in the Group, he led his way to sharpening
Aventis Pharma Limited
the focus of the Group, which had a conglomerate approach, on areas of core
competence and global reach. This saw the group focus on three verticals – Bayer CropScience Limited
Brewing, Distilling & Aviation, each area presenting clear leadership within India Kingfisher Airlines Limited
and global significance too. He was also responsible for opening up the beverage Investors’ Grievance Committee
alcohol sector to Global Best Practices and Transparency, enabling the entry of
Aventis Pharma Limited
institutional investors and rerating of the industry itself.
Bayer CropScience Limited (Chairman)

15
Report on Corporate Governance (contd.)
Under his leadership the market capitalization of the 3 principal Group Companies
has crossed US$ 7 billion, which bears testimony to the successful accomplishment
of business restructuring, consolidation and enhanced shareholder value. As the
principle leadership resource of UB Group, Mr. Nedungadi was key to concluding
the acquisition of Shaw Wallace & Co. India, Bouvet Ladubay, France, Whyte &
Mackay, Scotland, Air Deccan in India etc., each of which has contributed to the
value creation for all stake holders.
Mr. Nedungadi is the recipient of many awards of excellence including the Udyog
Ratan Award; CNBC TV 18’s – CFO of the year – M&A (2006), the CNBC Award
for India’s best CFO in the FMCG & Retail Sector (2007), the IMA Award for CFO
of the year (2007), etc. Memberships in esteemed organizations like Who’s Who
of Professionals only reinforce the above testimonials. Further, he is on the Board
of Directors of several companies, both in India and overseas.
His interest in social work and the arts engage his free time. He is an active
Rotarian and is a Trustee of India Foundation for Arts, a leading Grant making
Art Philanthropy.
Mr. Nedungadi joined the Board on August 9, 2002.
NOTE: Committee Memberships of Directors mentioned above includes only those Committees prescribed for reckoning of limits
under Clause 49 of the Listing Agreement.
None of the Directors are related inter-se.
COMMITTEES OF DIRECTORS
The Board has constituted Committees of Directors to deal with matters which need quick decisions and timely monitoring of
the activities falling within their terms of reference. The Board Committees are as follows:

AUDIT COMMITTEE
The Audit Committee comprises of Mr. Chugh Yoginder Pal, Mr. Sunil Alagh and Mr. Chhaganlal Jain as members, all of whom
are independent Directors. The Chairmanship of the Committee vests with Mr. Chugh Yoginder Pal.
The Committee oversees the financial reporting process, disclosure requirements and matters relating to Internal Control System.
The Committee also reviews periodically the financial accounts, adequacy of internal audit function, compliance with accounting
standards and other areas within its terms of reference, as under:
i) Oversee the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial
statement is correct, sufficient and credible;
ii) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory
auditor and the fixation of Audit fee;
iii) Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
iv) Reviewing, with the Management, the Annual Financial Statements before submission to the Board for approval, with
particular reference to:
s -ATTERSREQUIREDTOBEINCLUDEDINTHE$IRECTORS2ESPONSIBILITY3TATEMENTTOBEINCLUDEDINTHE"OARDSREPORTINTERMS
of Clause 2AA of Section 217 of the Companies Act, 1956;
s #HANGES IFANY INACCOUNTINGPOLICIESANDPRACTICESANDREASONSFORTHESAME
s -AJORACCOUNTINGENTRIESINVOLVINGESTIMATESBASEDONTHEEXERCISEOFJUDGMENTBYTHE-ANAGEMENT
s 3IGNIlCANTADJUSTMENTSMADEINTHElNANCIALSTATEMENTSARISINGOUTOF!UDITlNDINGS
s #OMPLIANCEWITHLISTINGANDOTHERLEGALREQUIREMENTSRELATINGTOlNANCIALSTATEMENTS
s $ISCLOSUREOFANYRELATEDPARTYTRANSACTIONS
s 1UALIlCATIONSINTHEDRAFTAUDITREPORT
v) Reviewing with the Management the quarterly financial statements before submission to the Board for approval;
vi) Reviewing with the Management, performance of Statutory and Internal Auditors, adequacy of Internal Control Systems;
vii) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing
and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit;
viii) Discussing with Internal Auditors any significant findings and follow up there on;
16
Report on Corporate Governance (contd.)
ix) Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud
or irregularity or failure of Internal Control Systems of a material nature and reporting the matter to the Board;
x) Discussing with Statutory Auditors before the audit commences, about the nature and scope of Audit as well as post-audit
discussion to ascertain any area of concern;
xi) To look into the reasons for substantial defaults in the payment to Depositors, Shareholders (in case of non-payment of
declared Dividends), Debenture-holders and Creditors;
xii) To review the function of the Whistle Blower mechanism, in case the same is existing, and
xiii) Carrying out any other function as may be mentioned in the terms of reference of the Audit Committee from time to
time.
The Audit Committee mandatorily reviews the following information:
1. Management discussion and analysis of financial conditions and results of operations;
2. Statement of significant related party transactions submitted by the management;
3. Management letters / letters of internal control weaknesses issued by the Statutory Auditors;
4. Internal audit reports relating to internal control weaknesses, and
5. The appointment, removal and terms of remuneration of the Chief Internal Auditor.
During the Year ended March 31, 2010, 4 Audit Committee Meetings were held on April 28, 2009, July 23, 2009, October 26,
2009 and January 22, 2010.

ATTENDANCE AT AUDIT COMMITTEE MEETINGS

Number of Audit Number of Audit


Names of the Directors Category Committee Committee Meetings
Meetings held attended

Mr. Chugh Yoginder Pal CHAIRMAN 4 4

Mr. Sunil Alagh MEMBER 4 4

Mr. Chhaganlal Jain MEMBER 4 4

The Company Secretary was present in all the Meetings of Audit Committee.

SHARE TRANSFER COMMITTEE


The Share Transfer Committee comprises of Mr. A K Ravi Nedungadi and Mr. Kalyan Ganguly as Members. Mr. Nedungadi,
a non-executive Director, is the Chairman of the Committee.
The Terms of reference are as under:
s 4OMONITOR4RANSFER 4RANSMISSIONAND4RANSPOSITIONOFTHE3HARESOFTHE#OMPANY
s )SSUEOF$UPLICATE3HARE#ERTIlCATES INLIEUOF#ERTIlCATESLOSTORMISPLACED
s )SSUEOF.EW3HARE#ERTIlCATESINLIEUOF#ERTIlCATESTORN MUTILATED CAGESFORTRANSFERlLLEDUPETCETERA
s #ONSOLIDATIONANDSUB DIVISIONOF3HARE#ERTIlCATES
s 4OOVERSEECOMPLIANCEOFTHENORMSLAIDDOWNUNDERTHE$EPOSITORIES!CT 
s 4OAPPOINTREMOVE2EGISTRARAND4RANSFER!GENT
s 4OOVERSEECOMPLIANCEOFTHENORMSLAIDDOWNUNDERTHE4RIPARTITE!GREEMENTWITH.ATIONAL3ECURITIES$EPOSITORY,IMITED
/Central Depository Services (India) Limited, and
s 0ERFORMALLSUCHACTSANDDEEDS MATTERSANDTHINGSASITMAYINITSABSOLUTEDISCRETIONDEEMNECESSARY EXPEDIENT DESIRABLE
usual or proper and to settle any question, dispute, difficulty or doubt that may arise in regard to the matters arising out of
the aforesaid acts.
In order to facilitate prompt and efficient service to the Shareholders all the transactions in connection with Transfer, Transmission,
issue of Duplicate Certificates, etc., have been entrusted to Alpha Systems Private Limited, Registrar and Transfer Agent and the
same are being processed and approved on fortnightly basis.

During the year ended March 31, 2010 the Committee met 9 times on April 16, 2009, June 01, 2009, June 30, 2009, July 16,
2009, September 08, 2009, September 30, 2009, November 16, 2009, December 31, 2009, and January 22, 2010 for approving
the transactions falling within the Terms of reference mentioned above.
17
Report on Corporate Governance (contd.)
The Board of Directors has, by a resolution by circulation passed on May 5, 2004, delegated the power to approve transfers /
transmission etc., upto 5000 shares to the Managing Director and the Company Secretary, who can act severally in the above
matter.

INVESTORS’ GRIEVANCE COMMITTEE


The Investors’ / Shareholders’ Grievance Committee comprises of Mr. Chugh Yoginder Pal, Mr. Sunil Alagh and Mr. Chhaganlal
Jain as Members. Mr. Chugh Yoginder Pal is the Chairman of the Committee.
The Terms of Reference for the Committee include inter alia specifically to look into the redressing of Shareholders’ and Investors’
complaints like non-receipt of Balance Sheet, non-receipt of declared Dividends, non-receipt of Share certificates, Demat Credit,
etcetera, and operate in terms of the provisions of the Listing Agreement and/or the provisions as may be prescribed under the
Companies Act, 1956 and other related Regulations from time to time..
The Compliance Officer is Mr. Govind Iyengar, Divisional Vice President – Legal and Company Secretary.

Number of Shareholders’ complaints received from 1-4-2009 to


31-3-2010 (These Complaints pertained mainly to non-receipt of
34
Share Certificates upon transfer, non-receipt of Annual Report,
non-receipt of Dividend etc.)
Number of complaints not solved to the satisfaction of the Nil
Shareholders
Number of pending Share transfers Two transfer cases for 400 shares were kept pending as
on 31.03.2010 as the process of transfer of shares was
in progress. These shares were subsequently transferred
after completion of due procedures.
During the year ended March 31, 2010, 2 Investors’ Grievance Committee Meetings were held on October 26, 2009 and
January 22, 2010 which were attended by all the members.

REMUNERATION / COMPENSATION COMMITTEE (A NON MANDATORY REQUIREMENT)


The Remuneration Committee comprises of Mr. Chugh Yoginder Pal, Mr. Sunil Alagh and Mr. Chhaganlal Jain as Members.
Mr. Sunil Alagh is the Chairman of the Committee.
The Committee is authorized inter alia:
s TODEALWITHMATTERSRELATEDTOCOMPENSATIONBYWAYOFSALARY PERQUISITES BENElTS ETC TOTHE-ANAGING$IRECTOR%XECUTIVE
Wholetime Directors of the Company and set guidelines for the salary, performance, pay and perquisites to other Senior
Employees, and
s TOFORMULATEANDIMPLEMENT%MPLOYEE3TOCK/PTION3CHEMETOEMPLOYEES$IRECTORSINTERMSOFPRESCRIBED'UIDELINES
During the year ended March 31, 2010, 2 Meetings of Remuneration Committee were held on October 26, 2009 and
December 07, 2009 which were attended by all the Members.

REMUNERATION POLICY
The Company carries out periodic reviews of comparable Companies and through commissioned survey ascertains the
remuneration levels prevailing in these Companies. The Company’s Remuneration Policy is designed to ensure that the
remuneration applicable to Managers in the Company is comparable with multinational Companies operating in the Brewing
or similar industry in India.
For the financial year ended March 31, 2010, Mr. Kalyan Ganguly, Managing Director and Mr. Guido de Boer, Director & CFO
were paid remuneration as under:
(Rupees)

Salary & Allowance Perquisites Retiral Benefits


Mr. Kalyan Ganguly 27,087,048 2,694,113 4,094,945
Mr. Guido de Boer 6,125,448 720,000 144,000

After his initial term of 5 years, as Managing Director, Mr. Kalyan Ganguly was re-appointed as Managing Director for a further
period of 5 years effective August 09, 2007 till August 08, 2012. Mr. Guido de Boer was appointed as Director of the Company
with effect from December 07, 2009 for a period of three years and his remuneration mentioned above reflects remuneration
paid for part of the year only.
18
Report on Corporate Governance (contd.)
SITTING FEES PAID TO DIRECTORS DURING 2009-2010
(Rupees)
Sl. No. Name of the Director Sitting Fees paid
1. Dr. Vijay Mallya 100,000/-
2. Mr. A K Ravi Nedungadi 180,000/-
3. Mr. Chugh Yoginder Pal 230,000/-
4. Mr. Chhaganlal Jain 250,000/-
5. Mr. Sunil Alagh 250,000/-
6. Mr. John Hunt 20,000/-
7. Mr. John Nicolson 20,000/-
8. Mr. Sijbe Hiemstra 20,000/-
9. Mr. Duco Reinout Hooft Graafland 20,000/-
10. Ms. Kiran Mazumdar Shaw 40,000/-
11 Mr. Madhav Bhatkuly 40,000/-
Total 1,170,000/-
Sitting fees are being paid @ Rs.20,000/- for attending Board and Audit Committee Meetings and Rs.10,000/- for attending
other Committee Meetings. No stock options are granted to any of the Directors so far.

COMMISSION PAID TO DIRECTORS DURING 2009-2010


(Rupees)
Sl. No. Name of the Director Commission
1. Dr. Vijay Mallya 6,367,439/-
2. Mr. Chugh Yoginder Pal 1,414,986/-
3. Mr. Chhaganlal Jain 1,414,986/-
4. Mr. Sunil Alagh 1,414,986/-

OTHER COMMITTEE MEETINGS


A Meeting of the Special Committee (Selection Committee) comprising of Mr. Sunil Alagh, Mr. Chhaganlal Jain and Mr. Sheshagiri
Hedge (Consultant & Expert) was held on July 23, 2009 to consider the re-appointment of Mr. Umesh Hingorani (a relative of
the Chairman of the Company) as Divisional Vice President – Business Development, which was attended by all the members.
The particulars of Equity Shares of the Company held by the Directors are furnished below:
Number of Equity Shares held
Sl. No. Name
As on March 31, 2010 As on March 31, 2009
1. Dr. Vijay Mallya 21353620 21353620
2. Mr. Kalyan Ganguly 14690 14690
3. Mr. Sunil Alagh 6800 6800

GENERAL BODY MEETINGS


The previous three Annual General Meetings of the Company were held on the dates, time and venue as given below:

Date Time Venue Special Resolutions Passed


Good Shepherd Auditorium, Opp. St. Joseph’s Pre-University
September 10, 2009 11.00 a.m. One
College, Residency Road, Bangalore-560 025.
Good Shepherd Auditorium, Opp. St. Joseph’s Pre-University
September 10, 2008 11.00 a.m. Three
College, Residency Road, Bangalore-560 025.
Good Shepherd Auditorium, Opp. St. Joseph’s Pre-University
September 28, 2007 12.30 p.m. Three
College, Residency Road, Bangalore-560 025.
All the Resolutions set out in respective Notices including Special Resolutions were passed by the Members at the above
Annual General Meetings.
19
Report on Corporate Governance (contd.)
DISCLOSURES
During the financial year ended March 31, 2010, there were no materially significant related party transactions with the
Company’s Directors or their relatives. Details of related party transaction form part of Notes on Accounts. In preparation of
financial statements for the year under review, treatment as prescribed in Accounting Standards has been followed.
The Company has complied with all the Statutory requirements comprised in the Listing Agreements / Regulations / Guidelines/
Rules of the Stock Exchanges / SEBI / other Statutory Authorities.
The Company did not suffer from any levies and there were no strictures on any Capital market related matters since incorporation.
The Company has complied with the mandatory requirements of Clause 49, as on date of this report.
The Company has also constituted a Remuneration Committee which is a non-mandatory requirement.
In terms of Section 313 of the Companies Act, 1956, Mr. Duco Reinout Hooft Grafland has appointed Mr. Ernst Willem Arnold
ven de Weert as his alternate on the Board and Mr. Sijbe Hiemstra has appointed Mr. Kenneth Choo Tay Siam as his alternate
on the Board.

MEANS OF COMMUNICATION
The Company has its own Web-site and all vital information relating to the Company and its performance involving quarterly
results, official Press release and presentation to analysts are posted on the Company’s Web-site “www.kingfisherworld.com”.
!PARTFROMFURNISHINGCOPIESOF2ESULTSTOALLTHE3TOCK%XCHANGES THE1UARTERLY (ALF YEARLYAND!NNUAL2ESULTSOFTHE#OMPANYS
performance are being published in The Financial Express and Kannada Prabha Newspapers.
In line with the requirement of clause 47 (f) of the Listing Agreement, the Company has designated an exclusive email ID viz,
ublinvestor@ubmail.com for the purpose of registering complaints by the investors. The investors can post their grievances by
sending a mail to the said email ID.
Management Discussion and Analysis form part of the Directors’ Report.

GENERAL SHAREHOLDER INFORMATION


The Company’s financial year begins on April 1 and ends on March 31 of immediately subsequent year.

Division of Financial Calendar Declaration of Unaudited Results


st st
1 1UARTER April 1 to June 30 1 1UARTER By August 14th
2nd1UARTER July 1 to September 30 2nd1UARTER By November 14th
3rd1UARTER October 1 to December 31 3rd1UARTER By February 14th

4th1UARTER January 1 to March 31 4th1UARTER By May 15th


In terms of amendment to the Listing Agreements, the unaudited results of the Company are to be declared with 45 days of
the end of the quarter.
ANNUAL GENERAL MEETING INFORMATION
Board Meeting for Consideration of Accounts July 21, 2010
Posting of Annual Report July 27, 2010
Book Closure dates August 19, 2010 and August 20, 2010
Last date for receiving proxy August 18, 2010 (12.15 p.m.)
Date of AGM August 20, 2010

ANNUAL GENERAL MEETING ON


Friday, August 20, 2010
VENUE
Good Shepherd Auditorium,
Opp. St. Joseph’s Pre-University College,
Residency Road, Bangalore 560 025.
TIME
12.15 p.m.
DATES OF BOOK CLOSURE
August 19, 2010 and August 20, 2010

20
Report on Corporate Governance (contd.)
LISTINGS AT

STOCK EXCHANGE SCRIP CODE

BANGALORE STOCK EXCHANGE LIMITED UNITEDBRED

BOMBAY STOCK EXCHANGE LIMITED 532478

NATIONAL STOCK EXCHANGE OF INDIA LIMITED UBL

The Company has voluntarily de-listed its Securities from the following Stock Exchanges:
Cochin Stock Exchange Limited w.e.f. 23.05.2009
Calcutta Stock Exchange Assn. Limited w.e.f. 31.03.2009
Ludhiana Stock Exchange Limited w.e.f. 25.04.2009
Ahmedabad Stock Exchange w.e.f. 12.03.2009
Madras Stock Exchange Limited w.e.f. 21.12.2009
Delhi Stock Exchange Limited w.e.f. 07.09.2009

Market price data of the Company’s Equity Shares traded on the Bombay Stock Exchange Limited, (BSE)
during the period April 2009 to March 2010
Month High (Rs.) Low (Rs.) Close (Rs.) BSE Sensex-Close
April 2009 120.05 87.75 110.45 11403.25
May 2009 156.40 105.00 141.90 14625.25
June 2009 160.50 104.00 115.30 14493.84
July 2009 162.40 108.35 146.30 15670.31
August 2009 173.50 138.25 159.15 15666.64
September 2009 166.00 139.00 147.80 17126.84
October 2009 162.75 130.80 132.35 15896.28
November 2009 159.50 122.00 148.45 16926.22
December 2009 201.00 148.05 168.45 17464.81
January 2010 178.00 144.00 147.75 16357.96
February 2010 184.00 150.00 178.05 16429.55
March 2010 199.00 176.15 192.05 17527.77
(Market Price data source: www.bseindia.com)
Graphical representation of the Company’s Shares in comparison to broad-based indices i.e., BSE Sensex, is given below:

Comparison - UBL Stock Price Vs. BSE Sensex

300 18000
17126.84 16926.22 17464.81 17527.77

250 15670.31 16357.96 16429.55 16000


15896.28
Stock Price in Rupess

14625.25 15666.64
200
14493.84 192.05 14000
Sensex

178.05
150 168.45
159.15
110.45 146.3 147.8 148.45 147.75
141.9 12000
132.35
100 115.3
11403.25

10000
50

0 8000
Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
Month
UBL Share Price BSE Senex

21
Report on Corporate Governance (contd.)
SHARE TRANSFER SYSTEM
All matters pertaining to Share Transfer are being handled by Alpha Systems Private Limited, the Registrar and Share Transfer
Agent of the Company. The Share Transfer requests received are processed by them and a Memorandum of Transfer is sent
to the Company for approval by the Committee. The average time taken for processing Share Transfer requests including
despatch of Share Certificates is 15 days, while it takes a minimum of 10-12 days for processing dematerialization requests.
The Company regularly monitors and supervises the functioning of the system so as to ensure that there are no delays or lapses
in the system.
The Company was offering the facility of transfer-cum-demat as per SEBI Guidelines. However, SEBI has vide its Circular No.SEBI/
MRD/Cir-10/2004 dated February 10, 2004, withdrawn transfer-cum-demat scheme. In line with the above, on receipt of transfer
requests the Company has discontinued issuing of option letters to the shareholders.
The distribution of shareholding as on March 31, 2010 is furnished below:

Category No. of % No. of Shares %


Shareholders (Percentage) held (Percentage)
(Rs.)

Up to 5000 35878 98.88 11278189 4.70

5001 – 10000 170 0.47 1224526 0.51

10001 – 20000 89 0.25 1260491 0.53

20001 – 30000 46 0.13 1144328 0.48

30001 – 40000 19 0.05 684957 0.29

40001 – 50000 10 0.03 466824 0.19

50001 – 100000 15 0.04 1075748 0.45

100001 and Above 56 0.15 222913192 92.86

TOTAL 36283 100.00 240048255 100.00

Shareholding Pattern as on March 31, 2010

Category No. of Shares held Percentage of Shareholding

Promoters
Indian 89994960 37.49
Foreign 89994960 37.49

Institutional Investors
Mutual Funds/UTI 3683929 1.53
Banks Financial Institutions 28380 0.01
Central/State Governments 660 0.00
Insurance Companies 1702757 0.71
Foreign Institutional Investors 30918545 12.88

Others
Bodies Corporate 6793788 2.83
Individuals 16681515 6.95
Trust 248761 0.10

Total 240048255 100.00

22
Report on Corporate Governance (contd.)
Shareholding Pattern as on March 31, 2010

6.95%
5.19%

12.88%

74.98%

Promoter & Group FIIs Others Individuals

DEMATERIALIZATION OF SHARES
The Company has set up requisite facilities for dematerialization of its Equity Shares in accordance with the provisions of the
Depositories Act, 1996 with National Securities Depository Limited and Central Depository Services (India) Limited. The Company
has entered into agreements with both the Depositories for the benefit of Shareholders. The status of Dematerialization of the
Company’s Shares as on March 31, 2010 is as under:

Mode No. of Shares % age No. of Shareholders

Physical mode 7385740 3.08 15347

Electronic mode 232662515 96.92 20936

TOTAL 240048255 100.00 36283

Shares held in physical & demat form as on March 31, 2010

3.08%

96.92%

Physical Mode Electronic Mode

23
Report on Corporate Governance (contd.)
For any assistance regarding Share Transfers, Transmissions, change of address, issue of duplicate / lost Share Certificates /
exchange of Share Certificate / Dematerialization and other relevant matters, please write to the Registrar and Share Transfer
Agent of the Company, at the address given below:

ALPHA SYSTEMS PRIVATE LIMITED


30, RAMANA RESIDENCY
4TH CROSS, SAMPIGE ROAD, MALLESWARAM
BANGALORE – 560 003.
Tel. No. : (080) 2346 0815 to 2346 0818 Fax No. : (080) 2346 0819
email: alfint@vsnl.com
Contact Persons: MR. VIJAYAGOPAL or MR. RAJARAMAN
Investors can also post their queries to ‘ublinvestor@ubmail.com’

OWN MANUFACTURING NETWORK

ANDHRA PRADESH – MALLEPALLY MAHARASHTRA – TALOJA

GOA – PONDA PUNJAB – LUDHIANA

KERALA – CHERTHALA & PALAKKAD WEST BENGAL – KALYANI

KARNATAKA – MANGALORE & NELMANGALA RAJASTHAN – CHOPANKI

ORISSA – KHURDA

CONTRACT MANUFACTURING NETWORK

In addition, the Company also has Manufacturing facilities through Associate Companies/Contract Breweries at Dharuhera,
Aurangabad, Kuthambakkam, Alwar, Lucknow, Ghaziabad, Daman, Thiruvallur, Bhopal, Indore, Srikakulam and Medak.

REGISTERED OFFICE

“UB TOWER”, UB CITY, 24, VITTAL MALLYA ROAD,


BANGALORE - 560 001
Phone: (91-80) 39855000, 22272806 & 22272807
Fax No. (91-80) 22211964, 22229488
Cable: UBEEGEE

B. NON-MANDATORY REQUIREMENTS
a) Chairman of the Board:
The Chairman of the Board is entitled to maintain a Chairman’s office at the Company’s expense and allowed reimbursement
of expenses incurred in performance of his duties.

b) Remuneration Committee:
The Company has set up a remuneration Committee.

c) Shareholder Rights:
The Company’s half yearly results are published in English and Kannada Newspapers having wide circulation and are
also displayed on the Company’s website. Press Releases are also issued which are carried by a few newspapers and also
displayed on the Company’s website. Hence, same are not sent to the shareholders.

d) Audit Qualifications:
There are no qualifications or adverse remarks in the Auditors’ Report which require any clarification or explanation.
e) Training of Board Members:
Having regard to the seniority and expertise in their respective areas of specialization, their training is not considered
necessary for the time being.
24
Report on Corporate Governance (contd.)
f) Mechanism for evaluating Non-Executive Directors:
The Board may at its discretion consider such requirement in future.

g) Whistle Blower Policy:


Though covered briefly in the code of conduct adopted by the Company, the Board may consider adopting a separate
mechanism for Whistle Blower Policy in future.

COMPLIANCE WITH CODE OF BUSINESS CONDUCT AND ETHICS

In accordance with Clause 49 sub-clause (I) (D) (ii) of the Listing Agreement, it is hereby confirmed that during
the year 2009-2010, all the members of the Board of Directors and Senior Managerial personnel have affirmed
their Compliance with the Company’s Code of Business Conduct and Ethics.

Place: Bangalore Kalyan Ganguly


Date: July 21, 2010 Managing Director

25
Report on Corporate Governance (contd.)
COMPLIANCE CERTIFICATE

To the Members of
UNITED BREWERIES LIMITED

Certificate of Compliance with the conditions of Corporate Governance


as stipulated under Clause 49 of the Listing Agreement

We have examined the compliance of conditions of Corporate Governance by United Breweries Limited for the year ended on
March 31, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company
has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement, save
and except the condition relating to number of independent Directors on the Board which stands complied as on the date of
this report.

We state that in respect of investor grievances received during the year ended on March 31, 2010, no grievances are pending
against the Company as per records maintained by the Company and presented to the Shareholders’/Investors’ Grievance
Committee.

We further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.

M R Gopinath
Company Secretary (In practice)
Bangalore

Date: July 21, 2010 FCS 3812 CP 1030

26
Auditors’ Report
To the Members of United Breweries Limited

1. We have audited the attached Balance Sheet of United Breweries Limited (the “Company”) as at March 31, 2010 and the
related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have
signed under reference to this report. These financial statements are the responsibility of the Company’s Management. Our
responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by Management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment)
Order, 2004 (together the “Order”), issued by the Central Government of India in terms of sub-section (4A) of Section 227
of ‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the Company
as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary
for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from
our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with
the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply
with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31, 2010 and taken on record by the
Board of Directors, none of the directors is disqualified as on March 31, 2010 from being appointed as a director in
terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial
statements together with the notes thereon and attached thereto give, in the prescribed manner, the information
required by the Act, and give a true and fair view in conformity with the accounting principles generally accepted in
India:
(i) in the case of the Balance Sheet, of the state of affairs of the company as at March 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For Price Waterhouse


Firm Registration Number – 007568 S
Chartered Accountants

J. Majumdar
Place: Bangalore Partner
Date: July 21, 2010 Membership Number – F51912
27
Annexure to Auditors’ Report
[Referred to in Paragraph 3 of the Auditors’ Report of even date to the members of United Breweries Limited on the financial statements for
the year ended March 31, 2010]
1. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed
assets.
b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items
over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of
its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the
year except for asset aggregating to Rs.701,796 (original cost in thousands) at one location of the Company, and no material
discrepancies between the book records and the physical inventory have been noticed.
c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been
disposed of by the Company during the year.
ii. a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification
is reasonable.
b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate
in relation to the size of the Company and the nature of its business.
c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory.
The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register
maintained under Section 301 of the Act and, therefore, paragraphs 3(b), 3(c) and 3(d) of the Order are not applicable.
b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register
maintained under Section 301 of the Act and, therefore, paragraphs 3(f) and 3(g) of the Order are not applicable.
iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the
sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to
the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to
correct major weaknesses in the aforesaid internal control system.
v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.
b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such
contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been
made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for purchase of
services aggregating to Rs.66,180 thousands as there are no comparable market prices, which, however, are considered to be
of special nature as explained by the management of the Company.
vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the
rules framed there under.
vii. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
viii. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section
209 of the Act for any of the products of the Company.
ix. a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the
Company is regular in depositing the undisputed statutory dues including provident fund, investor education and protection
fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material
statutory dues as applicable with the appropriate authorities.
b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of
dues of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess as at March 31, 2010 which have not
been deposited on account of a dispute, are given in Appendix 1.
x. The Company has no accumulated losses as at March 31, 2010 and it has not incurred any cash losses in the financial year ended
on that date or in the immediately preceding financial year.
xi. According to the records of the Company examined by us and the information and explanation given to us, the Company has not
defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.
xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other
securities.
xiii. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the
Company.
xiv. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.
xv. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given
by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of
the Company.
xvi. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for
28
Annexure to Auditors’ Report (contd.)
the purposes for which they were obtained.
xvii. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.
xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under
Section 301 of the Act during the year.
xix. The Company has not issued debentures during the year and there are no debentures outstanding as at the year-end.
xx. The Management has disclosed the end use of money raised by public issues (Refer Note 1 on Schedule 19) which has been verified
by us.
xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Price Waterhouse


Firm Registration Number – 007568 S
Chartered Accountants
J. Majumdar
Place: Bangalore Partner
Date: July 21, 2010 Membership Number – F51912

Appendix 1 to the Auditors’ Report


Referred to in paragraph ix (b) of the Annexure to the Auditors’ report of even date to the members of United Breweries Limited
on the financial statements for the year ended March 31, 2010.
Name of the statute Rs. In Thousands Forum where dispute is pending Year to which amount relates
Customs Act, 1962 4,148 Commissioner of Customs, Ludhiana 1991–92
2,033 High Court of Bombay 1991–92
2,972 High Court of Madras 1998–99
3,174 Deputy Commissioner of Customs, Siliguri 1998–99
Central Excise Act, 1944/ 4,253 High Court of Calcutta 1998–99
State Excise Acts 571 High Court of Andhra Pradesh 1992–98
1,866 High Court of Calcutta 1981– 82 &1987–88
8,076 High Court of Karnataka 2000–2001 to 2003–2004, 2005–06
1,229 High Court of Calcutta 1981–82
637 High Court of Calcutta 1988–89
2,955 High Court of Calcutta 1998–99
4,028 Commissioner of Excise 2000 to 2005
490 Commissioner (Appeals) Central Excise 2005–2007
277 Commissioner (Appeals) Central Excise 2007–2008
Sales Tax Acts 401 High Court of Andhra Pradesh 1997–98 to 1998–99
628 High Court of Kerala 1983–84 to 1986–87
38 High Court of Kerala 1990–91
4,225 High Court of Calcutta 1997–98
1,088 Sales Tax Appellate Tribunal, Karnataka 2002–03
90 Sales Tax Appellate Tribunal, Mumbai 1990–91
13 Assistant Commissioner (Assessment) Special Circle 2002–03
5,404 Sales Tax Appellate Tribunal / Deputy Commissioner (Appeals) 1975–76 to 1998–99, 2000–01 to 2001–02
69 Deputy Commissioner of Commercial Taxes (Appeals) Kollam 2001–02
130 Deputy Commissioner of Commercial Taxes (Appeals) Kollam 2000–01
107 Deputy Commissioner Appeals 1991–92
124 High Court of Kerala 1988–89
289 High Court of Kerala 1989–90
498 High Court of Kerala 1990–91
459 Court of Civil Judge, (Senior Division) Gurgaon 2001–02
185 Sales Tax Appellate Tribunal 1997–98
83 Sales Tax Appellate Tribunal 1998–99
841 Appellate Tribunal, Cherthala 1975 to 1994
Income Tax Act 61,340 Commissioner of Income Tax (Appeals) 2004–05
10,726 Commissioner of Income Tax (Appeals) 1997–98
2,968 Commissioner of Income Tax (Appeals) 1997–98
1,375 Commissioner of Income Tax (Appeals) 2000–01
5,853 Commissioner of Income Tax (Appeals) 2000–01
106,582 Commissioner of Income Tax (Appeals) 2006–07
Service Tax Act 34,510 Commissioner of Service Tax, Bangalore 2008–09
699 Commissioner of Service Tax, Mangalore 2005–06 (June’05) to 2009–10 (June’09)
193,905 The Customs, Excise and Service Tax Appellate Tribunal 2004–05 to 2007–08
Employee State Insurance Act 265 High Court of Kerala 1991–92

29
Balance Sheet as at March 31, 2010
Rs. in Thousands
Schedule 2010 2009

SOURCES OF FUNDS Rs. Rs. Rs. Rs.


Shareholders’ Funds
Capital 1 2,709,048 2,709,048
Reserves and Surplus 2 8,888,712 11,597,760 8,106,431 10,815,479
Loan Funds 3
Secured Loans 4,960,341 4,410,559
Unsecured Loans 1,753,006 6,713,347 1,753,006 6,163,565
Deferred Tax Liability [Refer Schedule 19 Note 15] 216,306 173,122
18,527,413 17,152,166
APPLICATION OF FUNDS
Fixed Assets 4
Gross Block 10,966,546 9,272,547
Less:Accumulated Depreciation and Amortisation 3,158,670 2,294,917
Net Block 7,807,876 6,977,630
Capital Work in Progress 575,331 8,383,207 865,308 7,842,938
Investments 5 1,530,699 1,940,957
Current Assets, Loans and Advances
Inventories 6 1,960,165 1,630,376
Sundry Debtors 7 6,162,470 4,699,634
Cash and Bank Balances 8 833,169 417,733
Other Current Assets 9 354,491 140,769
Loans and Advances 10 2,769,404 2,728,788
12,079,699 9,617,300
Less: Current Liabilities and Provisions
Liabilities 11 3,212,170 2,065,734
Provisions 12 254,022 183,295
3,466,192 2,249,029
Net Current Assets 8,613,507 7,368,271
18,527,413 17,152,166
Significant Accounting Policies 18 - -
Notes on Accounts 19 -

The Schedules referred to above and the notes thereon form an integral part of the financial statements.
This is the Balance Sheet referred to in our report of even date.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010


30
Profit and Loss Account for the year ended March 31, 2010
Rs. in Thousands
Schedule 2010 2009

INCOME

Sales and Service 13 29,558,009 24,604,481

Less: Excise Duty 9,583,515 7,621,772

19,974,494 16,982,709

Other Income 14 776,834 20,751,328 492,991 17,475,700

EXPENDITURE

Cost of Sales 15 12,171,636 10,472,894

Other Expenses 16 5,630,706 4,327,570

Interest and Finance Charges 17 555,006 896,377

Depreciation and Amortisation 882,692 19,240,040 762,150 16,458,991


Profit before taxation 1,511,288 1,016,709

Provision for Taxation


[Refer Schedule 19 Note 15]

- Current Tax (498,395) (294,549)

- Fringe Benefit Tax — (14,400)

- Deferred Tax (Charge)/Write back (43,184) (541,579) (82,820) (391,769)

Profit after taxation 969,709 624,940

Less:

Dividends [Refer Schedule 19 Note 22] (187,428) (170,912)

Transfer to General Reserve (100,000) (65,000)

682,281 389,028

Earnings per share (Basic/Diluted) 3.68 2.29


[Refer Schedule 19 Note 13]

Significant Accounting Policies 18


Notes on Accounts 19

The Schedules referred to above and the notes thereon form an integral part of the financial statements.
This is the Profit and Loss Account referred to in our report of even date.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010


31
Cash Flow Statement for the year ended March 31, 2010
Rs. in Thousands

2010 2009

A Cash Flow from Operating Activities


Profit before taxation 1,511,288 1,016,709
Adjustments for:
Interest Income (327,015) (147,143)
Depreciation and Amortisation 882,692 762,150
Interest Expenses (Net) 555,006 896,377
Dividend Income (3,861) (48,954)
Profit on sale of Investments (117,982) —
Provision for Doubtful Debts 1,184 2,710
Provision for Doubtful Advances — 928
Bad debts written off — 8,991
Bad advances written off 10,836 5,866
Provision for Doubtful Debts no longer required written back (117) —
(Profit)/Loss on Sale of Assets 3,426 1,004,169 2,185 1,483,110
Operating Profits before Working Capital changes 2,515,457 2,499,819
Adjustment for Working Capital Changes:
(Increase) / Decrease in Sundry Debtors (1,463,903) (1,489,798)
(Increase) / Decrease in Inventories (329,789) (461,209)
Increase / (Decrease) in Current Liabilities and Provisions 1,158,519 (208,833)
(Increase) / Decrease in Other Current Assets,
Loans and Advances (150,102) (785,275) (1,556,589) (3,716,429)
Cash Generated from Operations 1,730,182 (1,216,610)
Direct taxes (Income Tax and Fringe Benefit Tax) paid
(including TDS) (399,670) (309,292)
Net Cash Generated from Operating Activities 1,330,512 (1,525,902)

B Cash Flow from Investing Activities


Purchase of Fixed Assets (including acquisition on
amalgamation) (1,443,476) (1,441,519)
Sale of Fixed Assets 17,089 12,226
(Purchase) / Sale of Investments 528,240 (900,248)
Interest Income 113,293 9,547
Dividend Income 3,861 48,954
Net Cash used in Investing Activities (780,993) (2,271,040)

32
Cash Flow Statement for the year ended March 31, 2010 (contd.)
Rs. in Thousands
2010 2009

C Cash Flow from Financing Activities


(Repayment)/Proceeds from unsecured term loans (net) — 943,021
(Repayment)/Proceeds from Bank Borrowings (net) 552,053 (267,215)
Proceeds from Rights Issue — 4,248,854
Advance to subsidiary companies / others (74) (122)
Interest Paid (557,277) (756,990)
Dividend paid (including distribution tax) (128,785) (128,785)
Net Cash Generated from Financing Activities (134,083) 4,038,763

Net Increase / (Decrease) in cash and cash equivalents 415,436 241,821

Opening cash and cash equivalents


Cash on hand including Remittances in Transit 1,760 8,037
Bank Balances including cheques on hand 415,973 417,733 167,875 175,912

Closing cash and cash equivalents


Cash on hand including Remittances in Transit 2,838 1,760
Bank Balances including cheques on hand 830,331 833,169 415,973 417,733

Notes:
1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2010 and the
related Profit and Loss Account for the year ended on that date.
2. The above Cash Flow Statement has been prepared in consonance with the requirements of Accounting Standard (AS) - 3
on Cash Flow Statements as notified under Companies (Accounting Standards) Rules, 2006 and the reallocations required
for the purpose are as made by the Company.
3. Cash and cash equivalents include Rs.5,850 (2009: Rs.19,925) which are not available for use by the Company. [Refer
Note in Schedule 8]
4. Previous year’s figures have been regrouped / reclassified wherever necessary to conform with current year’s classification.

This is the Cash Flow Statement referred to in our report of even date.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010

33
Schedules to Balance Sheet
Rs. in Thousands
2010 2009

SCHEDULE 1
CAPITAL
Authorised
300,000,000 (2009: 300,000,000) Equity shares of Re.1 each 300,000 300,000
25,000,000 (2009: 25,000,000) Preference Shares of Rs. 100 each 2,500,000 2,500,000
2,800,000 2,800,000
Issued, Subscribed and Paid-up
240,048,255 (2009: 240,048,255) Equity shares of Re.1 each fully paid 240,048 240,048
[Refer Schedule 19 Note 1]
3%, 17,283,000 Cumulative Redeemable Preference Shares of Rs.100 each fully paid - Series A 1,728,300 1,728,300
[The above shares are redeemable at par at the earliest on March 31, 2011 and are extendable
upto March 31, 2015 based on mutual agreement between the Company and Scottish and
Newcastle India Limited (the preference shareholder)]
3%, 7,407,000 Cumulative Redeemable Preference Shares of Rs.100 each fully paid - Series B 740,700 740,700
[The above shares are redeemable at par at the earliest on March 31, 2015]
2,709,048 2,709,048

SCHEDULE 2
RESERVES AND SURPLUS
Securities Premium Account 6,521,774 2,296,925
Add: Premium on Equity Shares issued [Refer Schedule 19 Note 1] — 4,224,849
6,521,774 6,521,774
General Reserve:
As per Last Balance Sheet 170,000 105,000
Transfer from Profit and Loss Account 100,000 65,000
270,000 170,000

Profit and Loss Account balance 1,414,657 1,025,629


Add: Profit for the year 682,281 389,028
2,096,938 1,414,657
8,888,712 8,106,431

SCHEDULE 3
SECURED LOANS [Refer Schedule 19 Note 2(a)]
Foreign Currency Loans
- Working Capital Loan from Banks 576,170 650,329
- External Commercial Borrowing from Banks 936,587 1,404,069
Term Loans from Banks 1,055,651 1,470,034
Other Loans
- Working Capital Loan / Cash Credit from Banks 2,368,960 860,883
Interest accrued and due 22,973 25,244
4,960,341 4,410,559
UNSECURED LOANS [Refer Schedule 19 Note 2(b)]
Long Term Loan From Bank 1,750,000 1,750,000
Other Loan 3,006 3,006
1,753,006 1,753,006

34
SCHEDULE 4
FIXED ASSETS [Refer Schedule 19 Note 3] Rs. in Thousands

Net Value Cost Gross Depreciation Net Value


of Assets Gross Value of Value of of Assets
as at Particulars Assets as at As at As at as at
Deletions / Assets as at on for
March 31, March 31, 2009 Additions March 31, March 31, March 31,
Adjustments March 31, Deletions the year
2009 2010 2009 2010 2010

Intangible

249,205 Goodwill 623,924 — — 623,924 374,719 — 124,604 499,323 124,601

320,037 Licenses 400,037 — — 400,037 80,000 — 40,000 120,000 280,037

Tangible

1,105,394 Land - Freehold 1,105,394 155,955 — 1,261,349 — — — — 1,261,349


Schedules to Balance Sheet (contd.)

253,479 Land - Leasehold 270,221 — — 270,221 16,742 — 3,186 19,928 250,293

1,458,032 Buildings 1,616,677 337,715 — 1,954,392 158,645 — 53,846 212,491 1,741,901

4,057 Leasehold Improvements 6,407 — — 6,407 2,350 — 2,350 4,700 1,707

3,299,742 Plant and Machinery 4,712,865 1,151,893 31,921 5,832,837 1,413,123 16,074 566,487 1,963,536 3,869,301

57,730 Office Equipments 105,307 5,015 265 110,057 47,577 184 10,906 58,299 51,758

154,126 Furniture and Fittings 329,674 67,398 585 396,487 175,548 170 70,853 246,231 150,256

38,557 Laboratory Equipments 47,262 12,912 352 59,822 8,705 — 5,265 13,970 45,852

37,271 Vehicles 54,779 2,565 6,331 51,013 17,508 2,511 5,195 20,192 30,821

6,977,630 9,272,547 1,733,453 39,454 10,966,546 2,294,917 18,939 882,692 3,158,670 7,807,876

2009 7,149,646 2,152,300 29,399 9,272,547 1,547,755 14,988 762,150 2,294,917

865,308 Capital work in Progress [including capital advances Rs. 476,733 (2009: Rs. 615,625)] 575,331

7,842,938 8,383,207

35
36
SCHEDULE 5
INVESTMENTS [Refer Schedule 19 Note 4] Rs. in Thousands

2010 2009
Particulars Class of Number of Number of
Face Value CostRs. Face Value Cost.
Shares Shares/Units Shares/Units
CURRENT INVESTMENTS
INVESTMENT IN MUTUAL FUNDS – UNQUOTED
HDFC FMP 370D June 2008 VIII - Wholesale Plan Growth — — — 20,000,000 200,000 200,000
IDFC FMP Yearly Series 22 Plan B Growth — — — 10,000,000 100,000 100,000
I-Growth Capital Protection Portfolio — — — 3,000 300,000 300,000
Kotak FMP 12M Series 7 Institutional - Growth Plan — — — 15,025,820 150,258 150,258
Reliance Blended Debt Plus-Hybrid Option -Series XIV Plan — — — 500,000 50,000 50,000
Reliance Fixed Horizon Fund-IX - Series 2 - Institutional Growth Plan — — — 10,000,000 100,000 100,000
INVESTMENT IN MUTUAL FUNDS – QUOTED
HDFC Cash Management Fund -Treasury Advantage Plan - 48,846,135 10 490,000 — — —
Wholesale - Daily Dividend
LONG TERM INVESTMENTS (UNQUOTED, LONG TERM)
IN GOVERNMENT AND TRUSTEE SECURITIES – FULLY PAID
National savings certificate — 70 70 — 70 70
IN SUBSIDIARY COMPANIES – FULLY PAID SHARES
Associated Breweries & Distilleries Limited Equity 10,000 1,000 1,000 10,000 1,000 1,000
Maltex Malsters Limited Equity 22,950 2,295 450,000 22,950 2,295 450,000
NON TRADE:
IN JOINT VENTURE
Millennium Alcobev Private Limited Equity 6,140,000 61,400 256,277 6,140,000 61,400 256,277
Millennium Alcobev Private Limited Preference 3,000,000 300,000 333,252 3,000,000 300,000 333,252
IN ASSOCIATES:
United East Bengal Football Team Private Limited Equity 4,999 50 50 4,999 50 50
IN OTHERS:
Zorastrian Co-operative Bank Limited* Equity 2,000 25 50 2,000 25 50
TOTAL 1,530,699 1,940,957
*Acquired on amalgamation
Schedules to Balance Sheet (contd.)
SCHEDULE 5
INVESTMENTS (contd.)
Details of Investments In Mutual Funds during the year Rs. in Thousands

Balance as at Purchased Sold Balance as at


April 1, 2009 during the year during the year March 31, 2010
Name of Mutual Fund
No. of Units No. of Units No. of Units No. of Units
Cost Cost Cost Cost
in ‘000s in ‘000s in ‘000s in ‘000s

HDFC Cash Management Fund - Treasury


— — 88,720 890,000 39,874 400,000 48,846 490,000
Advantage Plan - Wholesale - Daily Dividend

HDFC FMP 370D June 2008 VIII -


20,000 200,000 — — 20,000 200,000 — —
Wholesale Plan Growth

IDFC FMP Yearly Series 22 Plan B Growth 10,000 100,000 — — 10,000 100,000 — —

I-Growth Capital Protection Portfolio 3 300,000 — — 3 300,000 — —

Kotak FMP 12M Series 7 Institutional - Growth 15,026 150,258 — — 15,026 150,258 — —
Schedules to Balance Sheet (contd.)

Reliance Blended Debt Plus-Hybrid Option -


0.50 50,000 — — 0.50 50,000 — —
Series XIV

Reliance Fixed Horizon Fund - IX - Series 2 -


10,000 100,000 — — 10,000 100,000 — —
Institutional Growth Plan

Total 900,258 890,000 1,300,258 490,000

37
Schedules to Balance Sheet (contd.)
Rs. in Thousands

2010 2009

SCHEDULE 6
INVENTORIES
Raw Materials 572,550 422,017
Packing Materials, Stores and Spares [Net of provisions Rs.5,914 (2009: Rs. 36,536)] 471,125 492,407
Work in Progress / Finished Goods (including Traded Goods) 856,550 677,309
Goods in transit 59,940 38,643
1,960,165 1,630,376

SCHEDULE 7
SUNDRY DEBTORS
(Unsecured, considered good unless otherwise stated)
Considered Good
- Over Six Months 69,920 174,000
- Others 6,092,550 4,525,634
Considered Doubtful
- Over Six Months 56,738 55,671
- Others — —
6,219,208 4,755,305
Less: Provision for Doubtful Debts (56,738) (55,671)
6,162,470 4,699,634

SCHEDULE 8
CASH AND BANK BALANCES
Cash on hand (including remittances in transit Rs.Nil (2009: Rs.Nil) 2,838 1,760
Balances with Scheduled Banks:
- in Current Account (including cheques on hand Rs.Nil (2009: Rs.7,537) [Refer Note 1 below] 818,484 396,131
- in Deposit Account [Refer Note 2 below] 11,847 19,842
833,169 417,733
Notes:
1. Includes balance in Unclaimed Dividend Account Rs.1,470 (2009: Rs.880)
2. Includes Rs.5,850 (2009: Rs.19,045) kept as margin against Letters of Credit and
Bank Guarantees.

SCHEDULE 9
OTHER CURRENT ASSETS
(Unsecured, considered good)
Income accrued on Investments and deposits 354,491 140,769
354,491 140,769

38
Schedules to Balance Sheet (contd.)
Rs. in Thousands

2010 2009

SCHEDULE 10
LOANS AND ADVANCES
(Unsecured, considered good unless otherwise stated)
Advance towards Contract Brewing Rights [Refer Schedule 19 Note 26] 1,550,000 1,550,000
Advances recoverable in cash or in kind or for value to be received
- Considered Good* 333,665 188,143
- Considered Doubtful 8,403 8,416
1,892,068 1,746,559

*[including: Rs.Nil (2009: Rs.36) due from Director of the Company –


maximum amount due during the year Rs.36 (2009: Rs.62)]
Less: Provision for Doubtful Advances (8,403) (8,416)
1,883,665 1,738,143

Advances to Subsidiary [Refer note below] 83,865 83,791


Balances with Excise Authorities 224,236 147,932
Other Deposits 551,273 633,832
Taxation [Net of Provisions] 26,365 125,090
2,769,404 2,728,788

Note: Represents advances to Associated Breweries and Distilleries Limited


[Maximum amount outstanding during the year Rs.83,873 (2009: Rs.83,791)]

SCHEDULE 11
LIABILITIES
Acceptances 10,441 63,986
Sundry Creditors
- Due to Micro, Small and Medium Enterprises [Refer Schedule 19 Note 7] 11,527 5,735
- Others 1,791,827 1,202,902
Other Liabilities 1,396,905 792,231
Unclaimed Dividend 1,470 880
3,212,170 2,065,734

SCHEDULE 12
PROVISIONS
Dividend Payable [including dividend distribution tax Rs.26,941 (2009: Rs.18,708)]
[Refer Schedule 19 Note 22] 187,428 128,785
Gratuity 7,265 20,893
Leave Entitlements 59,329 33,617
254,022 183,295

39
Schedules to Profit and Loss Account
Rs. in Thousands
2010 2009

SCHEDULE 13
SALES AND SERVICE
Sales 28,505,356 23,564,973
Income from Brand Franchise and Technical fees 1,052,653 1,039,508
29,558,009 24,604,481

SCHEDULE 14
OTHER INCOME
Guarantee Commission 21,322 21,300
Liabilities no longer required written back 54,725 51,059
Dividend Income 3,861 48,954
Interest Received (Gross) [Tax deducted at source Rs.31,271 (2009: Rs.2,103)] 327,015 147,143
Profit on sale of Investments 117,982 —
Provision for Doubtful Debts no longer required written back 117 1,304
Provision for Doubtful Advances no longer required written back 13 367
Miscellaneous 251,799 222,864
776,834 492,991

SCHEDULE 15
COST OF SALES
Manufacturing Expenses
Consumption of Raw Materials 2,521,576 2,141,148
Consumption of Packing Material and Stores and spares 5,115,279 3,951,047
Purchases of Finished Goods 2,006,411 2,087,358
Power and Fuel 491,102 575,268
Personnel Expenses
Salaries, Wages and Bonus 847,403 750,776
Contribution to Provident and Other funds 60,601 57,413
Staff Welfare 81,240 62,547
Others
Rent (including asset rentals) [Refer Schedule 19 Note 11] 82,608 80,307
Insurance 14,207 12,775
Repairs Building* 13,612 12,295
Repairs to Machinery* 126,671 99,318
Repairs Others 8,781 9,830
Travel and Conveyance 94,278 84,458
Communication Expenses 23,925 23,380
Rates and taxes 365,518 257,456
Legal and Professional fees 72,864 91,641
Miscellaneous 291,786 237,221
*Includes Materials consumed Rs.81,025 (2009: Rs.84,089)
40
Schedules to Profit and Loss Account (contd.)
Rs. in Thousands
2010 2009

Change in Inventory
Opening Stock 677,309 529,462
Closing Stock (856,550) (677,309)
Excise Duty on Opening Stock (366,473) (279,970)
Excise Duty on Closing Stock 499,488 366,473
12,171,636 10,472,894

SCHEDULE 16
OTHER EXPENSES
Selling and Promotion Expenses 5,592,406 4,288,278
Directors’ Sitting fees 15,666 11,772
Auditor’s Remuneration [Refer Schedule 19 Note 14] 7,188 6,809
Bad Debts Written Off — 8,991
Bad Advances Written Off 10,836 5,866
Provision for Doubtful Debts 1,184 2,710
Provision for Idle Assets — 31
Loss on sale of Assets (net) 3,426 2,185
Provision for Doubtful Advances — 928
5,630,706 4,327,570

SCHEDULE 17
INTEREST AND FINANCE CHARGES
Interest on Loans for a fixed period 458,673 394,522
Interest – Others 84,716 292,329
[Including exchange (Gain) / Loss on Foreign Currency Loans Rs.(74,159) (2009: Rs.139,486)]
Other Finance Charges 11,617 209,526
555,006 896,377

41
Significant Accounting Policies for the year ended March 31, 2010
Rs. in Thousands
SCHEDULE 18
1. Basis of Presentation of Financial Statements:
The Financial Statements of the Company have been prepared under historical cost convention, to comply in all material
aspects with the applicable accounting principles in India, the applicable accounting standards notified under Section 211(3C)
of the Companies Act, 1956 and to relevant provisions of the Companies Act, 1956.
2. Use of Estimates:
The preparation of the Financial Statements in conformity with Generally Accepted Accounting Policies (GAAP) in India
requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities as at the date of the Financial Statements, and the reported amounts of revenue and
expenses during the reported period. Actual result could differ from those estimates.

3. Revenue Recognition:
Revenue from sale of goods is recognised in accordance with the terms of sale, on dispatch from the Breweries/warehouses of
the Company and is net of trade discount but includes Excise Duty. Income from brand franchise is recognised at contracted
rates on sale/production of the branded products by the franchisees. Dividend Income is recognised when the Company’s
right to receive the payment is established. Royalty from foreign entities (net of tax), technical advisory and management
fees is recognised as per the terms of agreement.

4. Borrowing Costs:
Borrowing costs incurred for the acquisition of qualifying assets are recognised as part of cost of such assets when it is
considered probable that they will result in future economic benefits to the Company while other borrowing costs are
expensed in the period in which they are incurred.

5. Fixed Assets:
Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties,
freight and other incidental expenses relating to acquisition and installation of such assets.
The cost of fixed assets acquired on amalgamation have been determined at fair values as on the respective dates of
amalgamation and as per the related Schemes of Arrangement and include taxes / duties thereof.
6. Investments:
Long term investments are carried at cost less provision made to recognise any decline, other than temporary in the values
of such investments. Current investments are carried at cost or net realisable value, whichever is lower.

7. Inventories:
Inventories are valued at lower of cost and net realisable value. Costs include freight, taxes, duties and appropriate production
overheads and are generally ascertained on the First in First Out (FIFO) basis. Excise/Customs duty on stocks in bond is
added to the cost. Due allowance is made for obsolete and slow moving items.

8. Foreign Currency Transactions:


a) Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of such transactions.
All monetary items of foreign currency liabilities/ assets are restated at the rates ruling at the year end and all exchange
gains/ losses arising there from are adjusted to the Profit and Loss Account.
Exchange difference on forward contracts are recognised in the Profit and Loss Account in the reporting period in which
the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts is recognised
as income or expense for the year.
b) With retrospective effect from April 1, 2007 exchange differences on long term foreign currency monetary items (except for
exchange differences on items forming part of the company’s net investment in a non-integral foreign operation) are
i) adjusted to the cost of the asset in so far as they relate to the acquisition of a depreciable asset;
ii) accumulated in a “Foreign Currency Monetary Item Translation Difference Account” and amortised over the period
of the related long term foreign currency monetary item but not beyond March 31, 2011.
9. Depreciation and Amortisation:
Depreciation on fixed assets is provided on Straight Line Method based on the rates prescribed under Schedule XIV to the
Companies Act, 1956 except as indicated below:
42
Significant Accounting Policies for the year ended March 31, 2010 (contd.)
Rs. in Thousands

a) Plant and Machinery are depreciated at the rate of 10.34%. Further, depreciation is provided at higher rates in respect
of certain specific items of plant and machinery having lower useful life based on technical evaluation carried out by
the management.
b) Assets acquired on amalgamation (where original dates of acquisition are not readily available), are depreciated over
the remaining useful life of the assets as certified by an expert.
Cost of Goodwill arising on amalgamation is amortised over a period of 5 years.
Cost of Leasehold Land is amortised over the period of lease.
Assets individually costing less than Rs.5 are depreciated fully in the year of purchase.

10. Employee Retirement benefits:


(i) Defined-contribution plans:
Contributions to the Employees’ Provident Fund, Superannuation Fund, Employees’ State Insurance and Employees’
Pension Scheme are as per statute and are recognised as expenses during the period in which the employees perform
the services.
(ii) Defined-benefit plans:
Liability towards gratuity is determined on actuarial valuation using the Projected Unit Credit Method at the balance
sheet date. Actuarial Gains and Losses are recognised immediately in the Profit and Loss Account.
(iii) Other long term employee benefits:
Liability towards leave encashment and compensated absences are recognised at the present value based on actuarial
valuation at each balance sheet date.
(iv) Short term employee benefits:
Undiscounted amount of liability towards earned leave, compensated absences, performance incentives etc. are
recognised during the period when the employee renders the services.

11. Taxation:
Current tax is determined as per the provisions of the Income Tax Act, 1961.
Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not
recognised unless there is virtual certainty that sufficient future taxable income will be available against which such deferred
tax assets can be realised.
Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe Benefit” as
defined under Income Tax Act, 1961.

12. Earnings per share:


Annualised earnings/ (Loss) per equity share (basic and diluted) is arrived at based on ratio of profit/ (loss) attributable to
equity shareholders to the weighted average number of equity shares.
13. Impairment of Assets:
At each Balance Sheet date, the Company assesses whether there is any indication that assets may be impaired. If any such
indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable
amount, an impairment loss is recognised in the accounts to the extent the carrying amount exceeds the recoverable
amount.
14. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when the company has a present obligation as a result of past events, for which it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
of the amount can be made. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best
estimates of the obligation. When the company expects a provision to be reimbursed, the reimbursement is recognised as
a separate asset, only when such reimbursement is virtually certain.
A disclosure for contingent liability is made where there is a possible obligation or present obligation that may probably not
require an outflow of resources.
43
Notes on Accounts for the year ended March 31, 2010
Rs. in Thousands
SCHEDULE 19
Notes on Accounts
1. During the quarter ended June 30, 2008 the Company has raised Rs.4,248,854 through an issue of shares on rights basis
(Rights Issue).The proceeds of the Rights Issue have been utilised in the following manner:
a) Rs.2,026,980 (2009: Rs.3,197,096) for repayment of cash credit/overdraft accounts and for additional working capital
requirements.
b) Rs.1,731,874 (2009: Rs.501,500) for Capital Expenditure.
c) Pending utilisation the balance proceeds of Rs.490,000 (2009: Rs.550,258) have been invested in mutual funds.

2. Loan Funds:
Particulars 2010 2009
(a) Secured Loans
(i) Foreign Currency Loans [including interest accrued and due 1,530,677 2,074,321
Rs.17,920 (2009: Rs.19,923)]
Amount repayable within one year – Rs.886,570 (2009: Rs.960,729)
Foreign Currency Loan consists of External Commercial Borrowing (ECB)
from BNP Paribas and demand loan from Axis Bank. ECB from BNP Paribas
is secured by first charge on all moveable and immovable properties of
the Company except Taloja plant. Foreign currency demand loan from Axis
Bank is secured by first charge on the current assets namely, stock of raw
materials, work in progress and finished goods, stores and spares, bills
receivable and book debts.
(ii) Term Loan from Banks 493,151 657,534
Secured by First Charge over all moveable and immovable assets.
Amount repayable within one year – Rs.164,384 (2009: Rs.164,384)
(iii) Term Loan from Banks 562,500 812,500
Secured by Pari-passu charge on all moveable and immovable properties of
the Company except Taloja plant.
Amount repayable within one year – Rs.250,000 (2009: Rs.250,000)
(iv) From Banks [including interest accrued and due 2,374,013 866,204
Rs.5,053 (2009: Rs.5,321)]
Amount repayable within one year – Rs.2,374,013 (2009: Rs.866,204)
Secured by hypothecation of stock in trade, stores, raw materials, book debts
and a second charge on all the immovable properties of the Company.
(b) Unsecured Loans
(i) Loans from Banks [including interest accrued and due 1,750,000* 1,750,000*
Rs. Nil (2009: Rs.Nil)]
Amount repayable within one year – Rs.Nil (2009: Rs.Nil)
*Covered by personal guarantee of a director of the Company.
(ii) From Others 3,006 3,006
Amount repayable within one year – Rs.Nil (2009: Rs.Nil)

3. Fixed Assets:
Buildings amounting to Rs.53,030 (2009: Rs.49,619) and Plant and Machinery amounting to Rs.502,517 (2009: Rs.473,319)
are in premises not owned by the Company.

4. Investments:
The investments in Millennium Alcobev Private Limited and Maltex Malsters Limited are strategic in nature and the diminution
in their respective book values is considered temporary. The Company has obtained an independent valuations which are
in excess of the carrying costs of the respective investments, and hence, no provision for diminution in the value of the
investments is considered necessary.
44
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands

5. Upon expiry of earlier approval granted by the Central Government, fresh application under Section 314 of the Companies
Act, 1956 for payment of remuneration for the period November 1, 2009 to March 31, 2010 aggregating to Rs.1,650 to
an employee related to a Director of the Company is pending approval of the Central Government.

6. Investor Education and Protection Fund:


There are no overdue balances unremitted to the fund under section 205C of the Companies Act, 1956.
7. Disclosure of dues/ payments to micro and small enterprises to the extent such enterprises are identified by the
Company.

Sl.No. Particulars 2010 2009


(i) The principal amount remaining unpaid as at year end. 9,505 4,176
(ii) Interest due thereon remaining unpaid on year end. 42 44
(iii) The amount of interest paid by the buyer in terms of section 16 of the Micro,
Small and Medium Enterprises Development Act, 2006, along with the amount
— —
of the payment made to the supplier beyond the appointed day during each
accounting year.
(iv) The amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the appointed day during the
— —
year) but without adding the interest specified under the Micro, Small and
Medium Enterprises Development Act, 2006.
(v) The amount of interest accrued and remaining unpaid on year end. 1,980 1,515
(vi) The amount of further interest remaining due and payable even in the 2,022 1,559
succeeding years, until such date when the interest dues as above are actually
paid to the small enterprise, for the purpose of disallowance as a deductible
expenditure under section 23 of the Micro, Small and Medium Enterprises
Development Act, 2006.
The information given above and in Schedule 11 has been determined to the extent such parties have been identified by
the Company, on the basis of information disclosed by the creditors, which has been relied upon by the auditors.

8. Segmental Reporting:
The Company is engaged in manufacture, purchase and sale of beer including licensing of brands which constitutes a single
business segment. The Company operates only in India. Accordingly, primary and secondary reporting disclosures for business
and geographical segment as envisaged in AS-17 are not applicable to the company.

9. Capital Commitments:

Particulars 2010 2009


Estimated amount of Contracts remaining to be executed (net of capital advances) on 257,321 689,134
capital account and not provided for

10. Contingent Liabilities:

Particulars 2010 2009


a) Sales Tax/other taxes demands under appeal* 14,672 14,672
b) Employees State Insurance Demand* 265 265
c) Demand towards Water charges under appeal* — 133,019
d) Excise Duty/Customs Duty demands under appeal* 36,709 36,709
e) Income Tax demands under appeal* 188,844 82,262
f) Service Tax demands under appeal* 229,114 377,708
g) Claims against the Company not acknowledged as debt* 30,568 27,377
h) Letter of Credit outstanding 78,926 33,230

45
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands

i) Guarantees given by the company:


– on behalf of Subsidiaries of Joint Venture to third parties
Millennium Beer Industries Limited 800,000 800,000
United Millennium Breweries Limited 600,000 600,000
Empee Breweries Limited 730,000 730,000
– to third parties 19,060 28,348
j) Letter of undertaking to distributors towards countervailing duty for imports from 38,500 38,500
Nepal
*In the opinion of the management, the above demands / claims are not sustainable in law and accordingly no provision
has been made in the accounts.

11. Operating Lease:


The Company has entered into leasing arrangements for vehicles, computers, equipments, office premises and residential
premises that are renewable on a periodic basis, and cancellable/ non-cancellable in nature. Such leases are generally for a
period of 11 to 60 months with options of renewal against increased rent and premature termination of agreement through
notice period of 2 to 3 months, except in the case of certain leases where there is a lock-in period of 11 to 26 months.

Particulars 2010 2009


Lease payments during the year including Minimum lease payments 82,608 80,307
Rs. 4,999 (2009: Rs.4,999) on non-cancellable leases.
At the balance sheet date, future minimum lease rentals under non-cancellable
operating leases are as under:
Not later than one year 17,518 28,288
One to five years 15,374 12,887
Total 32,892 41,175

12. Related party disclosures:


A Name of the related parties:
(1) Subsidiary:
Associated Breweries & Distilleries Limited (ABDL)
Maltex Malsters Limited (MML)
(2) Associate:
United East Bengal Football Team Private Limited (UEBFTPL)
(3) Joint Venture:
Millennium Alcobev Private Limited (MAPL)
(4) Subsidiaries of the Joint Venture:
(a) Empee Breweries Limited (EBL)
(b) United Millennium Breweries Limited (UMBL)
(c) Millennium Beer Industries Limited (MBIL)
(5) Entity which has significant influence:
Scottish & Newcastle India Limited (SNIL)
(6) Others:
(a) Scottish & Newcastle Plc, (S & N), Holding Company of SNIL
(b) Scottish & Newcastle UK Limited (SNUK), Fellow Subsidiary of SNIL
(c) Scottish & Newcastle India Private Limited (SNIPL), Fellow Subsidiary of SNIL
(7) Key Management Personnel (KMP):
Mr. Kalyan Ganguly
Mr. Guido de Boer (Part of the year)
(8) Relative of Key Management Personnel:
Mrs. Suparna Bakshi Ganguly (Wife of Mr. Kalyan Ganguly)

46
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
B. (i) Transactions with related parties during the year:
Particulars MBIL MAPL UMBL EMPEE UEBFTPL KMP MML
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Purchase of goods 2,131,421 2,374,835 — — 7,489 4,304 31,004 6,061 — — — — — —
Sale of goods 186,164 187,471 — — 94,181 86,994 82,898 76,336 — — — — — —
[including sales taxes
/ VAT]
Receipts/(Payments) 45,363 30,671 — — 32,975 32,897 1,690 — — — — — — —
against rendering
Services
Brand Fees paid 25,398 18,021 — — — — — — — — — — — —
Technical, Advisory — 100,000 — — 40,000 40,000 160,000 100,000 — — — — — —
and Management Fee
Sponsorship and other — — — — — — — — 52,042 56,767 — — — —
payments
Guarantee 8,022 8,000 — — 6,000 6,000 7,300 7,300 — — — — — —
Commission received
Purchase of Assets 135 5,397 — — 15,249 2,386 — 26 — — — — — —
Sale of Assets /Spares 71 — — — 12,239 5,264 — 225 — — — — — —
Lease Rentals on 3,223 2,798 — — — — — — — — — — 5,682 5,901
Machinery
Interest Paid — — — — — — — — — — — — 1,720 2,021
Recovery of 18,259 18,690 — — 5,536 6,253 9,175 7,884 — — — — — —
employees Salaries (on
deputation)
Payments 2,320,534 2,602,249 19,130 15,315 116,033 19,649 (233,701) (211,572) 52,034 50,248 — — 8,841 8,499
(For Supplies including
loan in cash or kind)
Remuneration to — — — — — — — — — — 41,035 34,354 — —
Directors*
Guarantees and
Refer Schedule 19 Note 10(i)
Collaterals
Amount Due From/(To) 1,163,240 745,006 65,469 46,339 731,685 447,458 102,358 106,001 (26) (18) — — (10,697) (12,136)
* Kalyan Ganguly: Rs.34,266 (2009: Rs.34,354)
[Including payment to relative of KMP and a firm in which such relative is a partner – Rs.Nil (2009: Rs.2,883)]
Guido de Boer: Rs.6,769 (2009: Rs.Nil)
Figures in bracket indicate amounts received

(ii) Transactions with Subsidiaries:


Balance due from ABDL – Rs.83,865 (2009: Rs.83,791)
C. Transactions with S & N Group
1. Transaction with S & N
Management ees F Rs. 45,000 (2009: Rs.Nil)
2. Transactions with SNUK
Interest on ECB Rs. Nil (2009: Rs.17,852)
Purchase of Raw Material Rs. 123 (2009: Rs.186)
3. Transactions with SNIL
Balance of Preference Share Capital Rs. 2,469,000 (2009: Rs.2,469,000)
Dividend on above Rs. 74,070 (2009: Rs.74,070)
Interim Dividend on Equity Shares Rs. Nil (2009: Rs.13,499)
Final Dividend on Equity Shares Rs. 13,499 (2009: Rs.Nil)

13. Earnings per Share:


Particulars 2010 2009
a) Profit after taxation as per profit and loss account 969,709 624,940
b) Less: Preference Dividend (including dividend distribution tax thereon) 86,658 86,658
c) Net Profit attributable to equity shareholders 883,051 538,282
d) Weighted average number of equity shares outstanding 240,048,255 234,589,624
(Face value of Re.1 per share)
e) Earnings per share (Basic / Diluted) 3.68 2.29

47
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
14. Remuneration to Auditors:
Particulars 2010 2009
Fees 3,900 3,900
Tax Audit 560 560
Out of Pocket Expenses 167 287
Other Services 1,890 1,320
Service Tax 671 742
Total 7,188 6,809
15. Accounting for Taxes on Income:
Deferred Tax - The net deferred tax liability amounting to Rs. 216,306 (2009: Rs.173,122) has been arrived as follows:
Particulars 2010 2009
Deferred Tax Liability arising from:
Difference between carrying amount of fixed assets in the financial statements and 263,947 213,433
the Income Tax Return
Less: Deferred tax asset arising from:
Expenses charged in the financial statements but allowable as deductions in 25,500 18,528
future years under the Income Tax Act, 1961
Provision for Doubtful Debts 22,141 21,783
Net deferred tax liability 216,306 173,122
Movement during the year (43,184) (82,820)
Net Deferred tax charged off / (written back) in the profit and loss account (43,184) (82,820)
The tax impact for the above purpose has been arrived by applying a tax rate of 33.22% (2009: 33.99%) being the
substantively enacted tax rate for Indian Companies under the Income Tax Act, 1961.
16. Remuneration/Commission to Directors:
a) Remuneration to Executive Directors
Particulars 2010 2009
Salary and Allowances 32,480 23,762
Contribution to Provident and Other Funds 4,235 3,622
Perquisites 4,320 4,087
Total 41,035 31,471
Provision for contribution to employee retirement and other employee benefits which are based on actuarial valuation done
on an overall Company basis are excluded from the above disclosure.
b) Commission to Non Executive Directors – Rs.14,511 (2009: Rs.10,612)
c) Computation of net profits in accordance with Section 198 of the Companies Act, 1956:
Particulars 2010 2009
Net Profit after taxation 969,709 624,940
Add:
Depreciation and Amortisation (as per accounts) 882,692 762,150
Executive Directors’ Remuneration 41,035 31,471
Directors’ Fees 1,155 1,160
Commission to Non Executive Directors 14,511 10,612
Provision/(Write back) for doubtful debts and advances (net) 1,067 1,998
Book deficit /(surplus) on fixed assets sold, scrapped, etc. (net) 3,426 2,185
Taxation for the year 541,579 1,485,465 391,769 1,201,345
2,455,174 1,826,285
Less:
Depreciation as per Section 350 882,692 762,150
Deficit / (Surplus) on disposal of fixed assets (net) as per
3,426 2,185
Section 349
Profit on sale of Investment 117,982 —
Net Profit for Section 198 of the Companies Act, 1956 1,451,074 1,061,950

48
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
Remuneration Limit to Executive Directors –
145,107 53,595
10% (2009: 5%) of Net Profit as computed above.
Commission to Non Executive Directors – 1% of Net Profit
14,511 10,620
as computed above.
Remuneration Paid:
Executive Directors 41,035 31,471
Non Executive Directors 14,511 10,612

17. Quantitative Details:


A. Quantitative Particulars
Particulars 2010 2009
Beer in Beer in
Value in Rs. Value in Rs.
Hecto Litres Hecto Litres
Licensed Capacity* 8,585,000 5,995,000
Installed Capacity per annum* 7,030,000 6,110,000
Actual Production for the year 4,340,391 3,683,651
Sales – during the year 4,324,612 24,201,951 3,676,610 19,704,934
Malt Sales in Tonnes during the year 25,632 437,518 19,966 383,195
Opening Stock – Finished Goods 64,292 141,002 57,251 183,385
Closing Stock – Finished Goods 80,071 175,600 64,292 141,002
*Note: Licensing of products of the Company under the Industries (Development and Regulation) Act, 1951 is discontinued
and consequently the reported capacities are as per permissions obtained from the respective regulatory authorities on a
yearly basis. As regards installed capacity, the same has been certified by the Management and relied upon by the Auditors,
being a technical matter.
B. Particulars of Goods Traded by the Company
2010 2009
Particulars Quantity in Quantity in
Value in Rs. Value in Rs.
Hecto Litres Hecto Litres
Opening Stock 1,248 3,707 1 6
Purchases during the year 481,607 2,006,411 450,203 2,087,358
Sales during the year 477,012 3,865,887 448,956 3,476,844
Closing Stock 5,843 19,949 1,248 3,707

C. Consumption of Raw Materials


2010 2009
Particulars Quantity in Quantity in
Value in Rs. Value in Rs.
Tonnes Tonnes
Malt 53,880 1,205,383 45,660 1,082,006
Brewing Materials 36,274 1,145,253 30,302 910,637
Other Materials* 170,940 148,505
Total 2,521,576 2,141,148
* In view of the large number of items, individually comprising less than 10% of the total consumption, quantitative details
are not given.
18. Value of Imports during the year calculated on CIF basis:
Particulars 2010 2009
Raw Materials 366,030 208,882
Components and Spares 20,834 656,877
Capital Goods 31,294 97,196

49
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
19. Consumption:

2010 2009
Particulars Percentage to total Percentage to total
Value Value
Consumption Consumption
Value of Imported Raw Materials Consumed 153,898 6 133,622 6
Value of indigenous Raw Materials
2,367,678 94 2,007,526 94
Consumed
Value of Imported Packing materials and
360,763 7 854,216 21
stores and Spares Consumed
Value of indigenous Packing materials and
4,835,541 93 3,180,920 79
stores and Spares Consumed

20. Expenditure in Foreign Currency:

Particulars 2010 2009


Foreign Travel expenses of employees and others (net of recoveries) 11,717 9,152
Management Fees 45,000 —
Selling and Distribution expenses 117,617 169,725
Interest and Finance charges 54,028 167,181
Others 4,214 1,028

21. Earnings in Foreign Exchange:


Particulars 2010 2009
Services – Royalty 9,422 10,043

22. Details of Dividend:

Particulars 2010 2009


Dividend payable on Preference Share Capital @3% 74,070 74,070
Dividend Distribution tax payable on above 12,588 12,588
Interim Dividend paid on Equity Shares @15% — 36,007
Dividend Distribution tax paid on above — 6,120
Final Dividend payable on Equity Shares @36% (2009: 15%) 86,417 36,007
Dividend Distribution tax payable on above 14,353 6,120
Total 187,428 170,912

23. Details of Dividend paid in Foreign Currency:


Particulars 2010 2009
Number of non-resident shareholders 1 1
Number of Equity Shares held on which dividend was due 89,994,960 89,994,960
Amount remitted 13,499 13,499
Number of Preference Share held on which dividend was due 24,690,000 24,690,000
Amount remitted 74,070 74,070

50
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
24. (i) Disclosures envisaged in AS 15 in respect of gratuity are given below:

Particulars 2010 2009 2008


A) Reconciliation of opening and closing balances of
the present value of the defined benefit obligation:
Obligations at period beginning 153,948 142,593 116,056
Service Cost 8,369 13,052 43,502
Interest cost 11,818 9,601 9,284
Benefits settled (12,456) (10,881) (25,964)
Actuarial (gain)/loss (250) (417) (285)
Obligations at period end 161,429 153,948 142,593
B) Change in plan assets
Plan assets at period beginning, at fair value 133,055 136,455 116,056
Expected return on plan assets 10,155 10,657 9,284
Actuarial gain/(loss) (1,698) (7,569) 10,799
Contributions 25,109 4,393 26,280
Benefits settled (12,456) (10,881) (25,964)
Plan assets at period end, at fair value 154,165 133,055 136,455
C) Reconciliation of present value of the obligation and
the fair value of the plan assets:
Fair value of plan assets at the end of the year 154,165 133,055 136,455
Present value of the defined benefit obligations at the end
161,429 153,948 142,593
of the period
Liability recognised in the balance sheet (7,265) (20,893) (6,138)
D) Details of Gratuity cost
Service cost 8,369 13,052 43,502
Interest cost 11,818 9,601 9,284
Expected return on plan assets (10,155) (10,657) (9,284)
Prior Period Adjustment — — (23,739)
Actuarial (gain) / loss 1,447 6,243 6,243
Net gratuity /cost 11,479 18,239 26,006
E) Description of the basis used to determine the
overall expected rate of return on assets including
major categories of plan assets.
The expected return is calculated on the average fund
balance based on the mix of investments and the
expected yield on them.
Actual return on plan assets (Value) 12,371 7,001 23,997
Actual return on plan assets 8,457 3,087 20,083
F) Assumptions
Interest rate 8.00% 7.00% 8.00%
Discount factor 8.00% 7.00% 8.00%
Estimated rate of return on plan assets 8.00% 8.00% 8.00%
Salary Increase 5.00% 5.00% 5.00%
Attrition rate 1.00% 1.00% 1.00%
Retirement age 58 58 58

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors such as supply and demand factors in the Employment market.
51
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
(ii) Contribution to Provident and Other Funds under Manufacturing and Other Expenses (Schedule 15) includes Rs.49,122
(2009: Rs.39,174) being expenses debited under the following defined contribution plans:

Particulars 2010 2009 2008


Provident Fund 36,034 28,225 28,815
Superannuation 13,088 10,949 9,352

25. Disclosure Under Accounting Standard 21 and 27


a. The disclosure required with respect to the holdings in subsidiaries are given below:

Percentage of Percentage of
Country of
Name ownership interest at ownership interest at
Incorporation
March 31, 2010 March 31, 2009
Associated Breweries & Distilleries
India 100 100
Limited (ABDL)
Maltex Malsters Limited (MML) India 51 51
The reporting date of the subsidiaries and the accounting polices of the subsidiaries are same as those of the holding
company.

b. The disclosure required with respect to the holdings in associates are given below:

Percentage of Percentage of
Country of
Name ownership interest at ownership interest at
Incorporation
March 31, 2010 March 31, 2009
United East Bengal Football Team
India 50 50
Private Limited (UEBFTPL)

c. The Company’s interests, as a venturer, in jointly controlled entity (Incorporated Joint Venture) are:

Percentage of Percentage of
Country of
Name ownership interest at ownership interest at
Incorporation
March 31, 2010 March 31, 2009
Millennium Alcobev Private Limited India 50* 50*
* of the 50% of ownership interest, 10% represents control exercised through the subsidiary Associated Breweries &
Distilleries Limited (ABDL)
The aggregate amounts of each of the assets, liabilities, income and expenses related to the Company’s interests in the
jointly controlled entity is as follows:
Particulars 2010 2009
Assets
Fixed Assets 887,322 955,019
Current Assets, Loans and Advances
Inventories 243,453 158,103
Sundry Debtors 532,311 294,630
Cash and Bank Balances 93,187 93,352
Loans and Advances 78,258 83,168
Liabilities
Secured Loans 1,018,398 1,248,766
Unsecured Loans 223,489 223,489
Current Liabilities and Provisions
Liabilities 1,601,224 1,093,005
Provisions 2,717 2,111

52
Notes on Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
Particulars 2010 2009
Income
Sales less excise duty 2,780,518 2,311,864
Other Income 54,729 42,826
Expenditure
Cost of Sales 1,882,475 1,563,138
Other Expenses 731,623 665,402
Interest and Finance Charges 111,888 159,637
Depreciation and Amortisation 154,057 129,402
Other Matters
Capital Commitments
- Estimated amount of Contracts remaining to be executed on 8,896 46,348
capital account and not provided for
Contingent Liabilities
- Sales Tax/other taxes demands under appeal 3,774 3,281
- ESIC / PF demands under appeal 845 898
- Bank Guarantee given to Commissioner of Excise for Export of Beer 10,155 5,855
- Demand towards Water charges under appeal — 26,250
- Interest for delayed payment of Interest Free Loans 1,169 4,829
- Dividend on 1% Non Convertible Cumulative Redeemable Preference Shares 27,750 18,500
- Income Tax* 5,055 22,028
Claims against the Company not acknowledged as debt 5,877 6,107
*Net of Deposit under appeal – Rs.3,789 (2009: Rs.1,018)
26. The Company does not own any brewing facility in Tamil Nadu, which is one of the major markets in India contributing
about 18% of the Company’s business. With an intention of ensuring supplies from Balaji Distilleries Limited (BDL), having
brewing facilities in Tamil Nadu, the Company has entered into an agreement with the promoters of BDL to secure to the
Company perpetual usage of the brewery owned by BDL, and has advanced an amount of Rs.1,550,000 to one of the
Promoter Companies of BDL, acting for and on behalf of the other Promoters also.
Subsequently, the Boards of Directors of BDL and United Spirits Limited (USL) have considered and approved a proposal for
merger of BDL into USL, which is subject to obtaining of the necessary regulatory approvals by both the Companies. The
Company has obtained a commitment from USL that the arrangement with Promoters will be adhered to on completion
of the proposed merger. The advance will be repaid upon the completion of the merger or in accordance with the terms of
the related Agreement, whichever is earlier.
In June 2009,BDL has allotted 90,000 Equity Shares upon conversion of warrants to certain parties.These parties have entered
into a supplemental agreement with the Company to the effect that they will be bound by the terms and conditions of the
earlier agreement between the Company and the promoters of BDL.
27. As the Company does not have any long term monetary item since April 1, 2007 till date, the change in the accounting
policy referred to in Schedule 18 note 8 (b) has no impact on the profit for the year.
28. All amounts disclosed in Notes to Account and other Schedules are in Rs. 000 except for:
i) Number of Shares / units in Notes on Schedule 1, Schedule 5, Note 13, Note 23, and Note 26.
ii) Basic and Diluted EPS in the Profit and Loss Account and in Note 13.
III 1UANTITATIVEDATAIN.OTE
29. The previous year’s figures have been regrouped to conform to current year’s classification.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants
J. Majumdar Govind Iyengar
Partner Company Secretary
Membership No. F51912
Bangalore, July 21, 2010. Bangalore, July 21, 2010.
53
Notes on Accounts for the year ended March 31, 2010 (contd.)
STATEMENT PURSUANT TO SECTION 212(1)(e) OF THE COMPANIES ACT, 1956 AS AT MARCH 31, 2010
Rs. in Thousands
Net aggregate Profit/(Loss) of the subsidiary so far
a) No. of Equity as it concerns the Members of the Company
Shares at the end of
b) Extent of Holdings Not dealt with in the Dealt with in the
the financial year of
Accounts of the Company Accounts of the Company
the Subsidiary
(i) (ii) (i) (ii)

Sl. Name of the United Other United Other For Subsidiary’s For previous For the For previous
No. Subsidiary Breweries Subsidiary Breweries Subsidiary Financial Financial Years Subsidiary’s Financial
Limited Companies Limited Companies Year ended of Subsidiary Financial Years of the
31.3.2010 since it became Year ended Subsidiary since
a Subsidiary 31.3.2010 it became a
Subsidiary

1. Associated Breweries 10,000 — 100% — (145) (1,418) — —


& Distilleries Ltd.

2 Maltex Malsters 22,950 — 51% — 1,967 (972) — —


Limited

DISCLOSURE UNDER CLAUSE 32 OF THE LISTING AGREEMENT

Name of the listed Company: United Breweries Limited Rs. in Thousands

Amount outstanding Value of investments


Name of the Company Terms
as at March 31, 2010 as at March 31, 2010

Subsidiaries: No stipulation towards


Associated Breweries & Distilleries Ltd. (ABDL) 83,865 1,000 repayment and interest

Maltex Malsters Limited (10,983) 450,000 —

Joint Venture: No stipulation towards


Millennium Alcobev Pvt. Ltd. 65,469 589,529 repayment and interest

Associates:
United East Bengal Football Team Pvt. Ltd. — 50 —

54
Balance Sheet Abstract
COMPANY’S GENERAL BUSINESS PROFILE

Rs. in Thousands

I. Registration Details
Registration No. : 25195
State Code : 08
Balance Sheet Date : 31.03.2010

II. Capital Raised during the year


Public Issue : NIL
Right Issue : NIL
Bonus Issue : NIL
Private Placement : NIL

III. Position of Mobilisation and Deployment of Funds


Total Liabilities 18,527,413 Total Assets 18,527,413
Sources of Funds Application of Funds
Paid up Capital 2,709,048 Net Fixed Assets 8,383,207
Reserves & Surplus 8,888,712 Investments 1,530,699
Secured Loans 4,960,341 Net Current Assets 8,613,507
Unsecured Loans 1,753,006 Deferred Tax Assets NIL
Deferred Credit NIL Miscellaneous Expenditure NIL
Deferred Tax Liability 216,306

IV. Performance of Company


Turnover 20,751,328 Total Expenditure 19,240,040
(Includes non-recurring items)

Profit Before Tax 1,511,288 Profit After Tax 969,709


Earnings per Share 3.68 Dividend Rate 36%

V. Generic Names of three Principal Products/Services of the Company


Item Code – ITC Code 22030000
Product Description Beer made from Malt

55
56
SUMMERISED FINANCIALS OF SUBSIDIARY COMPANY AS REQUIRED IN TERMS OF APPROVAL
UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956, GRANTED BY THE GOVERNMENT OF INDIA,
MINISTRY OF CORPORATE AFFAIRS, VIDE LETTER DATED 15.06.2010

Rs. in Thousands
Issued & Profit & Loss
Profit Provision Profit
Sl. Name of the Subscribed Reserves & Total Total Account Proposed
Investments Turnover before for after
No. Subsidiary Share Surplus Assets Liabilities Debit Dividend
Taxation Taxation Taxation
Capital Balance

1. Associated 1,000 — 84,865 84,865 83,380 1,563 22 (145) — (145) —


Breweries &
Distilleries Limited

2 Maltex Malsters 4,500 20,763 31,534 31,534 — — 6,948 2,129 (162) 1,967 —
Limited

Note:
The Annual Report along with related information of the above companies shall be made available for investors of the Company and its subsidiaries seeking the Report/
information at any point of time. The Annual Report is also available for inspection of investors at the Registered Office of the Companies.
Auditors’ Report on Consolidated Financial Statements
TO THE BOARD OF DIRECTORS OF UNITED BREWERIES LIMITED

1. We have audited the attached Consolidated Balance Sheet of United Breweries Limited (the “Company”) and its subsidiaries
and joint venture hereinafter referred to as the “Group” (refer Note 1 on Schedule 19 to the attached consolidated financial
statements) as at March 31, 2010, the related Consolidated Profit and Loss Account and the Consolidated Cash Flow
Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These
consolidated financial statements are the responsibility of the Company’s Management. Our responsibility is to express an
opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. We did not audit the financial statements of (i) two subsidiaries and included in the consolidated financial statements, which
constitute total assets of Rs.109,699 thousands and net assets of Rs.15,279 thousands as at March 31, 2010, total revenue
of Rs.37 thousands, net loss of Rs.4,948 thousands and net cash outflows amounting to Rs.7,608 for the year then ended;
and (ii) one associate company which constitute net results of Rs. Nil for the year then ended. These financial statements and
other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion
on the consolidated financial statements to the extent they have been derived from such financial statements is based solely
on the report of such other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s Management in accordance
with the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements and Accounting Standard (AS)
27 - Financial Reporting of Interests in Joint Ventures notified under sub-section 3C of Section 211 of the Companies Act,
1956.

5. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other
financial information of the components of the Group as referred to above, and to the best of our information and according
to the explanations given to us, in our opinion, the attached consolidated financial statements give a true and fair view in
conformity with the accounting principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2010;
(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date;
and
(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.

For Price Waterhouse


Firm Registration Number – 007568 S
Chartered Accountants

J. Majumdar
Place: Bangalore Partner
Date: July 21, 2010 Membership Number – F51912
57
Consolidated Balance Sheet as at March 31, 2010
Rs. in Thousands
Schedule 2010 Joint Venture Total 2010 2009
SOURCES OF FUNDS Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Shareholders’ Funds
Capital 1 2,709,048 467,000 3,176,048 3,176,048
Reserves and Surplus 2 8,888,908 11,597,956 162,603 629,603 9,051,511 12,227,559 8,267,408 11,443,456

Loan Funds 3
Secured Loans 4,965,912 1,018,398 5,984,310 5,671,620
Unsecured Loans 1,753,706 6,719,618 223,489 1,241,887 1,977,195 7,961,505 1,977,195 7,648,815
Minority Interest [Refer Schedule 19 Note 5] 11,517 — 11,517 11,517
Deferred Tax Liability (Net) 215,804 20,310 236,114 175,963
[Refer Schedule 19 Note 12]
18,544,895 1,891,800 20,436,695 19,279,751

APPLICATION OF FUNDS
Goodwill [Refer Schedule 19 Note 4] 438,062 1,428,463 1,866,525 1,866,525
Fixed Assets
Gross Block 4 10,991,199 1,713,052 12,704,251 10,848,524
Less: Accumulated Depreciation and
Amortisation 3,167,124 854,768 4,021,892 3,003,529
Net Block 7,824,075 858,284 8,682,359 7,844,995
Capital Work in Progress 575,331 8,399,406 29,038 887,322 604,369 9,286,728 972,151 8,817,146

Investments 5 1,163,029 (672,854) 490,175 900,437


Foreign Currency Monetary Item Translation — 10,864 10,864 40,792
Difference Account [Refer Schedule 19 Note 18]

Current Assets, Loans and Advances


Inventories 6 1,960,165 243,453 2,203,618 1,788,479
Sundry Debtors 7 6,162,487 532,311 6,694,798 5,005,981
Cash and Bank Balances 8 833,400 93,187 926,587 511,257
Other Current Assets 9 354,491 729 355,220 141,601
Loans and Advances 10 2,694,910 77,525 2,772,435 2,739,532
12,005,453 947,205 12,952,658 10,186,850
Less: Current Liabilities and Provisions
Liabilities 11 3,207,033 1,601,224 4,808,257 3,166,314
Provisions 12 254,022 2,717 256,739 185,271
3,461,055 1,603,941 5,064,996 3,351,585
Net Current Assets 8,544,398 (656,736) 7,887,662 6,835,265
Profit and Loss Account — 894,741 894,741 819,586

18,544,895 1,891,800 20,436,695 19,279,751

Significant Accounting Policies 18 — — — 0

Notes on Accounts 19 — — — —

The Schedules referred to above and the notes thereon form an integral part of the consolidated financial statements.

This is the Consolidated Balance Sheet referred to in our report of even date.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010


58
Consolidated Profit and Loss Account for the year ended March 31, 2010
Rs. in Thousands

Schedule 2010 Joint Venture Total 2010 2009


INCOME

Sales and Service 13 29,558,009 3,923,936 33,481,945 27,853,325

Less: Excise Duty 9,583,515 1,143,418 10,726,933 8,558,750

19,974,494 2,780,518 22,755,012 19,294,575

Other Income 14 776,871 20,751,365 54,729 2,835,247 831,600 23,586,612 535,816 19,830,391

EXPENDITURE

Cost of Sales 15 12,167,650 1,882,473 14,050,123 12,030,743

Other Expenses 16 5,630,767 731,623 6,362,390 4,993,021

Interest and Finance Charges 17 553,319 111,888 665,207 1,054,338

Depreciation and Amortisation 886,357 19,238,093 154,057 2,880,041 1,040,414 22,118,134 896,347 18,974,449

Profit / (Loss) before taxation 1,513,272 (44,794) 1,468,478 855,942

Provision for Taxation

- Current tax (498,614) (13,337) (511,951) (296,072)

- Fringe Benefit Tax — — — (15,830)

- Deferred Tax (Charge)/Write back (43,127) (541,741) (17,024) (30,361) (60,151) (572,102) (88,248) (400,150)

Profit / (Loss) after taxation 971,531 (75,155) 896,376 455,792

Profit / (Loss) brought forward from


1,413,031 (819,586) 593,445 368,485
previous year

Adjustment on account of adoption


of Accounting Standard 11 — — — 5,080
on ‘Foreign exchange fluctuation’

2,384,562 (894,741) 1,489,821 829,357

Less: Appropriations

Transfer to General Reserve (100,000) — (100,000) (65,000)

Dividend (187,428) — (187,428) (170,912)


[Refer Schedule 19 Note 15]

Balance carried to Balance Sheet 2,097,134 (894,741) 1,202,393 593,445

Earnings per share (Basic/Diluted)


3.37 1.57
[Refer Schedule 19 Note 14]

Significant Accounting Policies 18

Notes to Accounts 19

The Schedules referred to above and the notes thereon form an integral part of the consolidated financial statements.

This is the Consolidated Profit and Loss Account referred to in our report of even date.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010


59
Schedules to Consolidated Balance Sheet
Rs. in Thousands
2010 Joint Venture Total 2010 2009

SCHEDULE 1
Capital
Authorised
300,000,000 (2009: 300,000,000) Equity shares of Re.1 each 300,000 — 300,000 300,000
25,000,000 (2009: 25,000,000) Preference Shares of Rs.100 each 2,500,000 — 2,500,000 2,500,000
2,800,000 — 2,800,000 2,800,000
Issued, Subscribed and Paid-up
240,048,255 (2009: 240,048,255) Equity shares of Re.1 each fully paid 240,048 — 240,048 240,048
3%, 17,283,000 (2009: 17,283,000) Cumulative Redeemable 1,728,300 — 1,728,300 1,728,300
Preference Shares of Rs.100 each - Series A
[The above shares are redeemable at par at the earliest on March 31, 2011 and
are ‘extendable upto March 31, 2015’ based on mutual agreement between the
company and ‘Scottish and Newcastle India Limited’ (the preference shareholder)]
3%, 7,407,000 (2009: 7,407,000) Cumulative Redeemable 740,700 — 740,700 740,700
Preference Shares of Rs.100 each - Series B
[The above shares are redeemable at par at the earliest on March 31, 2015]
Convertible Redemable Preference Shares — 467,000 467,000 467,000
2,709,048 467,000 3,176,048 3,176,048

SCHEDULE 2
Reserves and Surplus
Capital Reserve — 1,204 1,204 1,204
Securities Premium Account 6,521,774 161,399 6,683,173 2,458,324
Premium received during the year — — — 4,224,849
General Reserve:
As per last Balance Sheet 170,000 — 170,000 105,000
Transfer from Profit and Loss Account 100,000 — 100,000 65,000
Profit and Loss Account balance 2,097,134 — 2,097,134 1,413,031
8,888,908 162,603 9,051,511 8,267,408

SCHEDULE 3
Secured Loans [Refer Schedule 19 Note 6]
Foreign Currency Loans
– Working Capital Loan from Bank 576,170 — 576,170 650,329
– Term Loan from Bank — 148,116 148,116 262,711
External Commercial Borrowings – From Banks 936,587 — 936,587 1,404,069
Term Loans from Banks 1,061,222 140,375 1,201,597 1,706,955
Other Loans —
– Working Capital Loan / Cash Credit from Banks 2,368,960 — 2,368,960 860,883
Interest accrued and due 22,973 1,644 24,617 28,220
From Others — 605,108 605,108 564,924
From Rabo Finance India Private Limited — 123,155 123,155 193,529
4,965,912 1,018,398 5,984,310 5,671,620
Unsecured Loans
[Refer Schedule 19 Note 6]
Long Term Loans from Banks 1,750,000 — 1,750,000 1,750,000
Others Loans 3,706 — 3,706 3,706
Deferred Sales Tax Loan — 223,489 223,489 223,489
1,753,706 223,489 1,977,195 1,977,195

62
SCHEDULE 4 Consolidated Fixed Assets (Refer Schedule 19 Note 7) Rs. in Thousands

Cost Depreciation / Amortisation


Net Value of Gross Value of Gross Value of Net Value of
Assets as at Particulars Assets as at Assets as at Assets as at
Deletions / As at As at
March 31, 2009 March 31, 2009 Additions March 31, 2010 on Deletions for the year March 31, 2010
Adjustments March 31,2009 March 31, 2010

Intangible

249,205 Goodwill 623,924 — — 623,924 374,719 — 124,604 499,323 124,601

320,037 Licenses 400,037 — — 400,037 80,000 — 40,000 120,000 280,037

Tangible

1,105,503 Land - Freehold 1,105,503 155,955 — 1,261,458 — — — — 1,261,458

253,479 Land - Leasehold 270,221 — — 270,221 16,742 — 3,186 19,928 250,293

1,463,787 Buildings 1,622,971 337,715 — 1,960,686 159,184 — 54,336 213,520 1,747,166

4,057 Leasehold - Improvements 6,407 — — 6,407 2,350 — 2,350 4,700 1,707

3,312,750 Plant and Machinery 4,730,047 1,152,562 31,921 5,850,688 1,417,297 16,080 569,579 1,970,796 3,879,892

57,765 Office Equipments 105,348 5,015 265 110,098 47,583 184 10,911 58,310 51,788

154,141 Furniture and Fittings 329,691 67,398 585 396,504 175,550 170 70,855 246,235 150,269

38,556 Laboratory Equipments 47,261 12,912 352 59,821 8,705 — 5,265 13,970 45,851

37,539 Vehicles 55,121 2,565 6,331 51,355 17,582 2,511 5,271 20,342 31,013

6,996,819 9,296,531 1,734,122 39,454 10,991,199 2,299,712 18,945 886,357 3,167,124 7,824,075

848,176 Share of Joint Venture 1,551,993 164,414 3,355 1,713,052 703,817 3,106 154,057 854,768 858,284

7,844,995 10,848,524 1,898,536 42,809 12,704,251 3,003,529 22,051 1,040,414 4,021,892 8,682,359
Schedules to Consolidated Balance Sheet (contd.)

2009 8,568,202 2,403,231 122,909 10,848,524 2,211,759 104,577 896,347 3,003,529

865,308 Capital work in Progress [including capital advances Rs.476,733 (2009: Rs.615,625)] 575,331

106,843 Share of Joint Venture [including capital advances Rs.1,252 (2009: Rs.118)] 29,038

8,817,146 9,286,728

63
64
SCHEDULE 5 Rs. in Thousands
Investments
2010 2009
Class of
Particulars Number of Face Number of Face
Shares Cost Cost
Shares / Units Value Shares / Units Value
CURRENT INVESTMENTS
Investment in Mutual Funds - Unquoted, Non Trade
HDFC FMP 370D June 2008 VIII -Wholesale Plan Growth — — — 20,000,000 200,000 200,000
IDFC FMP Yearly Series 22 Plan B Growth — — — 10,000,000 100,000 100,000
I-Growth Capital Protection Portfolio — — — 3,000 300,000 300,000
Kotak FMP 12M Series 7 Institutional - Growth Plan — — — 15,025,820 150,258 150,258
Reliance Blended Debt Plus-Hybrid Option -Series XIV Plan — — — 500,000 50,000 50,000
Reliance Fixed Horizon Fund- IX - Series 2 - Institutional Growth Plan — — — 10,000,000 100,000 100,000
)NVESTMENTIN-UTUAL&UNDS 1UOTED .ON4RADE
HDFC Cash Management Fund - Treasury Advantage Plan - Wholesale - Daily Dividend 48,846,135 10 490,000 — — —
LONG TERM INVESTMENTS (unquoted, long term)
In government and trustee securities - Fully paid
National savings certificate — 70 70 — 70 70
Non trade:
In Associates
United East Bengal Football Team Private Limited Equity 4,999 50 — 4,999 50 —
In Others
Zorastrian Co-operative Bank Limited* Equity 4,000 25 100 4,000 25 100
Sub total 490,170 900,428
Share in Joint Venture Investments 5 5 9 9
TOTAL 490,175 900,437
* Acquired on Amalgamation

Details of Investments In Mutual Funds during the year


Balance as at April 1, 2009 Purchased during the year Sold during the year Balance as at March 31, 2010
Name of Mutual Fund No. of Units No. of Units No. of Units No. of Units
Cost Cost Cost Cost
in ‘000s in ‘000s in ‘000s in ‘000s
HDFC Cash Management Fund - Treasury Advantage
— — 88,720 890,000 39,874 400,000 48,846 490,000
Plan - Wholesale - Daily Dividend
HDFC FMP 370D June 2008 VIII - 20,000 200,000 — — 20,000 200,000 — —
Wholesale Plan Growth
IDFC FMP Yearly Series 22 Plan B Growth 10,000 100,000 — — 10,000 100,000 — —
I-Growth Capital Protection Portfolio 3 300,000 — — 3 300,000 — —
Kotak FMP 12M Series 7 Institutional - Growth 15,026 150,258 — — 15,026 150,258 — —
Reliance Blended Debt Plus-Hybrid Option -
0.50 50,000 — — 0.50 50,000 — —
Series XIV
Reliance Fixed Horizon Fund - IX - Series 2 - Institutional 10,000 100,000 — — 10,000 100,000 — —
Growth Plan
Total 900,258 890,000 1,300,258 490,000
Schedules to Consolidated Balance Sheet (contd.)
Schedules to Consolidated Balance Sheet (contd.)
Rs. in Thousands
2010 Joint Venture Total 2010 2009

SCHEDULE 6
Inventories
Raw Materials 572,550 23,601 596,151 456,556
Packing Material,Stores and Spares
471,125 83,825 554,950 539,818
[Net of provision Rs.7,656 (2009: Rs.38,640)]
Work In Progress / Finished Goods (including Traded Goods)
856,550 120,663 977,213 741,839
[Net of provision Rs.Nil (2009: Rs.63)]
Goods in transit 59,940 15,364 75,304 50,266
1,960,165 243,453 2,203,618 1,788,479
SCHEDULE 7
Sundry Debtors
(Unsecured, Considered good unless stated otherwise)
Considered Good
- Over Six Months 69,920 23,415 93,335 185,434
- Others 6,092,567 508,896 6,601,463 4,820,547
Considered Doubtful
- Over Six Months 56,738 35,039 91,777 88,944
- Others — — — —
6,219,225 567,350 6,786,575 5,094,925
Less: Provision for Doubtful Debts (56,738) (35,039) (91,777) (88,944)
6,162,487 532,311 6,694,798 5,005,981
SCHEDULE 8
Cash and Bank Balances
Cash on hand [including Remittances - in Transit Rs.Nil (2009: Rs.Nil)] 2,848 382 3,230 4,620
Balances with Scheduled Banks:
- in Current Account [including cheques on hand
818,705 80,502 899,207 474,055
Rs.1,566 (2009: Rs.10,125)]
- in Deposit account [Refer notes below] 11,847 12,303 24,150 32,582
833,400 93,187 926,587 511,257
Note: 1. Includes Rs.10,350 (2009: Rs.19,820) kept as margin against letter
of credit and bank guarantees.
2. Includes balance in Unclaimed dividend Account Rs.1,470 (2009: Rs.880)

SCHEDULE 9
Other Current Assets
Income accrued on Investments and deposits 354,491 729 355,220 141,601
354,491 729 355,220 141,601

65
Schedules to Consolidated Balance Sheet (contd.)
Rs. in Thousands
2010 Joint Venture Total 2010 2009

SCHEDULE 10
Loans and Advances
(Unsecured, Considered good unless otherwise stated)
Advance towards Contract Brewing unit [Refer Schedule 19 Note 8] 1,550,000 — 1,550,000 1,550,000
Advances recoverable in cash or in kind or for value to be received* 334,206 25,407 359,613 224,048
Considered Doubtful 8,403 43,647 52,050 51,674
1,892,609 69,054 1,961,663 1,825,722
Less: Provision for Doubtful Advances (8,403) (43,647) (52,050) (51,674)
1,884,206 25,407 1,909,613 1,774,048
*[including: Rs.Nil (2009: Rs.36) due from Director of the Company,
maximum amount due during the year Rs.36 (2009: Rs.62)]
Balances with Excise Authorities 224,308 20,818 245,126 163,930
Other Deposits 552,884 12,597 565,481 653,545
Advance Tax / Tax Deducted at Source (net) 33,512 18,703 52,215 148,009
2,694,910 77,525 2,772,435 2,739,532
SCHEDULE 11
Liabilities
Sundry Creditors
- Due to Micro, Small and Medium Enterprises 11,527 3,096 14,623 8,113
- Others 1,797,552 270,932 2,068,484 1,421,170
- Other Liabilities 1,386,043 1,324,811 2,710,854 1,669,780
Interest accrued but not due — 2,385 2,385 2,385
Unclaimed Dividend 1,470 — 1,470 880
Acceptances 10,441 — 10,441 63,986
3,207,033 1,601,224 4,808,257 3,166,314
SCHEDULE 12
Provisions
Dividend payable [Refer Schedule 19 Note 15] 187,428 — 187,428 128,785
Gratuity 7,265 1,872 9,137 22,098
Leave Entitlements 59,329 845 60,174 34,388
254,022 2,717 256,739 185,271

66
Schedules to Consolidated Profit and Loss Account
Rs. in Thousands
2010 Joint Venture Total 2010 2009

SCHEDULE 13
Sales and Service
Sales 28,505,356 3,884,431 32,389,787 26,789,900
Income from Brand Franchise and Technical Fees 1,052,653 39,505 1,092,158 1,063,425
29,558,009 3,923,936 33,481,945 27,853,325

SCHEDULE 14
Other Income
Guarantee Commission 21,322 — 21,322 21,300
Liability no longer required written back 54,740 7,433 62,173 56,594
Profit on sale of Assets — 220 220 26
Profit on sale of Investment (net) 117,982 — 117,982 2
Dividend Income 3,868 — 3,868 48,954
Interest Received [Gross]
327,015 1,501 328,516 150,541
{Tax deducted at source Rs.31,367 (2009: Rs.2,379)}
Provision for Doubtful Debts no longer required written back 117 55 172 1,880
Provision for Doubtful Advances no longer required written back 13 10 23 367
Miscellaneous Income 251,814 45,510 297,324 256,152
776,871 54,729 831,600 535,816

SCHEDULE 15
Cost of Sales
Manufacturing Expenses
Consumption of Raw Materials 2,521,576 514,378 3,035,954 2,573,527
Consumption of Packing material and Stores and spares 5,115,279 1,025,969 6,141,248 4,772,552
Purchases of finished goods 2,006,411 4,003 2,010,414 2,089,746
Power and Fuel 491,102 123,062 614,164 701,397
Personnel Expenses
Salaries, Wages and Bonus 847,439 72,302 919,741 813,100
Contribution to Provident and Other funds 60,601 3,528 64,129 61,211
Welfare Expenses 81,265 6,315 87,580 66,254

Others
Rent including Lease rent 77,520 2,074 79,594 75,134
Insurance 14,207 1,689 15,896 14,238
Repairs Building 13,617 7,850 21,467 14,453
Repairs to Machinery 126,671 38,462 165,133 127,915
Repairs - Others 8,781 1,556 10,337 10,955
Travel and Conveyance 94,682 4,513 99,195 89,461
Communication Expenses 23,975 750 24,725 24,161
Rates and taxes 365,529 49,749 415,278 303,766
Legal and Professional fees 73,013 7,819 80,832 97,718
Miscellaneous expenses 292,208 27,111 319,319 260,540
[includes material consumed Rs.107,894 (2009: Rs.107,781)]
Change in Inventory
Opening Stock 677,309 64,530 741,839 585,671
Closing Stock (856,550) (120,289) (976,839) (741,839)
Excise Duty on Opening Stock (366,473) (25,010) (391,483) (300,700)
Excise Duty on Closing Stock 499,488 72,112 571,600 391,483
12,167,650 1,882,473 14,050,123 12,030,743

67
Schedules to Consolidated Profit and Loss Account (contd.)
Rs. in Thousands
2010 Joint Venture Total 2010 2009

SCHEDULE 16
Other Expenses
Selling and Promotion Expenses 5,592,417 625,977 6,218,394 4,830,355

Technical Management Fee — 100,000 100,000 120,000

Directors Sitting fees 15,681 293 15,974 12,123

Auditors Remuneration 7,223 1,581 8,804 8,424

Bad debts written off — — — 9,699

Bad Advances written off 10,836 111 10,947 5,866

Provision for Doubtful Debts 1,184 1,821 3,005 2,716

Provision for Idle Assets / Fixed Assets written off — — — 31

Investment written off — 4 4 —

Inventory written off including provisions — 1,289 1,289 622

Loss on sale of Assets 3,426 148 3,574 2,185

Provision for Doubtful advances — 399 399 1,000

5,630,767 731,623 6,362,390 4,993,021

SCHEDULE 17

Interest and Finance Charges

Interest on Loans for a fixed period 458,766 96,992 555,758 507,306

Interest Others 82,936 4,055 86,991 326,663


[Including exchange (gain) / loss on foreign currency loans
Rs.(74,159) (2009: Rs.139,486)]

Finance Charges 11,617 10,841 22,458 220,369

553,319 111,888 665,207 1,054,338

68
Significant Accounting Policies for the year ended March 31, 2010
Rs. in Thousands
SCHEDULE 18
1. Basis of Presentation of Financial Statements:
The Financial Statements of the Company have been prepared under historical cost convention, to comply in all material
aspects with the applicable accounting principles in India, the applicable accounting standards notified under Section 211(3C)
of the Companies Act, 1956 and to relevant provisions of the Companies Act, 1956.
Basis of Consolidation:
The Financial Statements of the Subsidiaries and the Joint Venture (JV) used in the consolidation are drawn up to the same
reporting date as that of the parent company, i.e., year ended March 31, 2010.
Estimates:
The preparation of the Financial Statements in conformity with Generally Accepted Accounting Policies (GAAP) in India
requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities as at the date of the Financial Statements, and the reported amounts of revenue and
expenses during the reported period. Actual result could differ from those estimates.
2. Principles of Consolidation:
i) The financial statement of the parent company and its subsidiaries have been consolidated on a line by line basis by
adding together the book values of like items of assets, liabilities, income and expenditure after eliminating intra group
balances and intra group transactions.
ii) The financial statements of the parent company and its subsidiaries have been consolidated using uniform accounting
policies for like transactions and other events.
iii) The financial statement of the Joint Venture has been consolidated using proportionate consolidation on the basis of
control exercised in the Joint Venture.
iv) Goodwill represents the difference between the company’s share in the networth and the cost of acquisition of subsidiary
and Joint Venture at each stage of acquisition of investment. Goodwill arising on consolidation is not amortised. Negative
goodwill is recognised as capital reserve on consolidation.
3. Revenue Recognition:
Revenue from sale of goods is recognised in accordance with the terms of sale, on dispatch from the Breweries/warehouses of
the Company and is net of trade discount but includes Excise Duty. Income from brand franchise is recognised at contracted
rates on sale/production of the branded products by the franchisees. Dividend Income is recognised when the Company’s
right to receive the payment is established. Royalty from foreign entities (net of tax), technical advisory and management
fees is recognised as per the terms of agreement.
4. Borrowing Costs:
Borrowing costs incurred for the acquisition of qualifying assets are recognised as a part of cost of such assets when it
is considered probable that they will result in future economic benefits to the Company while other borrowing costs are
expensed in the period in which they are incurred.
5. Fixed Assets:
Fixed assets are stated at their original cost of acquisition and subsequent improvements thereto including taxes, duties,
freight and other incidental expenses relating to acquisition and installation of such assets.
The cost of fixed assets acquired on amalgamation have been determined at fair values as on the respective dates of
amalgamation and as per the related Schemes of Arrangement and include taxes / duties thereof.
Assets identified and evaluated technically as obsolete and held for disposal are stated at their estimated net realisable
value.
6. Investments:
Long term investments are carried at cost less provision made to recognise any decline, other than temporary, in the values
of such investments. Current investments are carried at cost or net realisable value, whichever is lower.
7. Inventories:
Inventories are valued at lower of cost and net realisable value. Costs include freight, taxes, duties and appropriate production
overheads and are generally ascertained on the First in First Out (FIFO) basis. Excise/Customs duty on stocks in bond is added
to the cost. Due allowance is made for obsolete and slow moving items.
8. Foreign Currency Transactions:
a) Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of such transactions.
All monetary items of foreign currency liabilities/ assets are restated at the rates ruling at the year end and all exchange
gains/ losses arising therefrom are adjusted to the Profit and Loss Account.
Exchange difference on forward contracts are recognised in the Profit and Loss Account in the reporting period in which
the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts is recognised
as income or expense for the year.
69
Significant Accounting Policies for the year ended March 31, 2010 (contd.)
Rs. in Thousands
b) With retrospective effect from April 1, 2007 exchange differences on long term foreign currency monetary items (except
for exchange differences on items forming part of the company’s net investment in a non-integral foreign operation),
are
(i) adjusted to the cost of the asset in so far as they relate to the acquisition of a depreciable asset;
(ii) accumulated in a “Foreign Currency Monetary Item Translation Difference Account” and amortised over the period
of the related long term foreign currency monetary item but not beyond March 31, 2011.
9. Depreciation and amortisation:
Depreciation on fixed assets is provided on Straight Line Method based on the rates prescribed under Schedule XIV to the
Companies Act, 1956 except as indicated below:
a) Plant and Machinery are depreciated at the rate of 10.34%. Further, depreciation is provided at higher rates in respect
of certain specific items of plant and machinery having lower useful life based on technical evaluation carried out by the
management.
b) Assets acquired on amalgamation (where original dates of acquisition are not readily available), are depreciated over the
remaining useful life of the assets as certified by an expert.
Cost of Goodwill arising on amalgamation is amortised over a period of 5 years.
Cost of Leasehold Land is amortised over the period of lease.
Assets individually costing less than Rs.5 are depreciated fully in the year of purchase.
10. Employee Retirement benefits:
(i) Defined-contribution plans:
Contributions to the Employees’ Provident Fund, Superannuation Fund, Employees’ State Insurance and Employees’
Pension Scheme are as per statute and are recognised as expenses during the period in which the employees perform
the services.
(ii) Defined-benefit plans:
Liability towards gratuity is determined on actuarial valuation using the Projected Unit Credit Method at the balance
sheet date. Actuarial Gains and Losses are recognised immediately in the Profit and Loss Account.
(iii) Other long term employee benefits:
Liability towards leave encashment and compensated absences are recognised at the present value based on actuarial
valuation at each balance sheet date.
(iv) Short term employee benefits:
Undiscounted amount of liability towards earned leave, compensated absences, performance incentives etc. are
recognised during the period when the employee renders the services.
11. Taxation:
Current tax is determined as per the provisions of the Income Tax Act, 1961.
Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised
unless there is virtual certainity that sufficient future taxable income will be available against which such deferred tax assets
can be realised.
Fringe Benefit Tax is determined at current applicable rates on expenses falling within the ambit of “Fringe Benefit” as defined
under Income Tax Act, 1961.
12. Earnings per share:
Annualised earnings/ (loss) per equity share (basic and diluted) is arrived at based on ratio of profit/ (loss) attributable to
equity shareholders to the weighted average number of equity shares.
13. Impairment of Assets:
At each Balance Sheet date, the Company assesses whether there is any indication that assets may be impaired. If any such
indication exists, the Company estimates the recoverable amount. If the carrying amount of the assets exceeds its recoverable
amount, an impairment loss is recognised in the accounts to the extent the carrying amount exceeds the recoverable
amount.
14. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when the company has a present obligation as a result of past events, for which it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
of the amount can be made. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best
estimates of the obligation. When the company expects a provision to be reimbursed, the reimbursement is recognised as
a separate asset, only when such reimbursement is virtually certain.
A disclosure for contingent liability is made where there is a possible obligation or present obligation that may probably not
require an outflow of resources.
70
Notes on Consolidated Accounts for the year ended March 31, 2010
Rs. in Thousands
SCHEDULE 19
1. The Consolidated Financial Statement (CFS) presents the consolidated accounts of United Breweries Limited (the Company)
with its following Subsidiaries, Associates and Joint Venture (‘UBL Group’ or ‘Group’).

Ownership Percentage
Particulars Country of Incorporation
2010 2009
Name of the Subsidiary
Associated Breweries & Distilleries Limited (ABDL) 100 100 India
Maltex Malsters Limited (MML) 51 51 India
Name of the Associate
United East Bengal Football Team Private Limited (UEBFTPL) 50 50 India
Name of the Joint Venture (JV)
Millennium Alcobev Private Limited (MAPL) 50* 50* India
*Of which 10% represents control exercised through the subsidiary ABDL.

2. During the quarter ended June 30, 2008 the Company has raised Rs.4,248,854 through an issue of shares on rights basis
(Rights Issue).The proceeds of the rights issue have been utilised in the following manner:
a. Rs.2,026,980 (2009: Rs.3,197,096) for repayment of cash credit/overdraft accounts and for additional working
capital requirements.
b. Rs.1,731,874 (2009: Rs.501,500) for Capital Expenditure.
c. Pending utilisation the balance proceeds of Rs.490,000 (2009: Rs.550,258) have been invested in mutual funds.

3. The Consolidated Financial Statements of Millennium Alcobev Private Limited (MAPL), represents consolidation of MAPL and
its subsidiaries Empee Breweries Limited (EBL), United Millennium Breweries Limited (UMBL) and Millennium Beer Industries
Limited (MBIL) as per Accounting Standard (AS) – 21.
4. The group evaluates the carrying value of its Goodwill whenever events or changes in circumstances indicate that its carrying
value may be impaired for diminution, other than temporary. The group has currently reassessed the circumstances that
could indicate the carrying amount of Goodwill may be impaired. As a consequence of such reassessment, the management
believes that the expected revenues and earnings of the acquired entities are sustainable in the foreseeable future, and hence
goodwill is not impaired.
5. Acquisition of Maltex Malsters Limited:
During the financial year ended March 31, 2008 the Company has acquired 22,950 equity shares of Rs.100 each in Maltex
Malsters Limited for a consideration of Rs.450,000 which is based on an independent valuation, resulting in a goodwill of
Rs.438,012 as detailed below.

Particulars Rs. Rs.


Fixed Assets (Net book value) 23,983
Deferred Tax Assets 2,587
Current Assets
Sundry Debtors 13,187
Cash & Bank Balances 94
Loans & Advances 11,567
24,848
Current Liabilities and Provision
Current Liabilities 8,072
Provisions 209
8,281
Net Current Asset 16,567
Loans
Secured Loans 18,932
Unsecured Loans 700 19,632

71
Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands

Particulars Rs. Rs.


Net Worth as on March 31, 2008 23,505
UBL’s Share - 51% 11,988
Purchase Consideration 450,000
Goodwill 438,012
Minority Interest 11,517

6. Loan Funds:
Particulars 2010 2009
Secured Loans
(a) Foreign Currency Loans Including Interest Accrued and due 1,679,721 2,338,948
Rs.18,848 (2009: Rs.21,839)
Loans repayable within one year – Rs.871,207 (2009: Rs.1,056,260)
Foreign Currency Loans consist of External Commercial Borrowing (ECB) from BNP
Paribas and Foreign Currency Loan from Axis Bank. ECB from BNP Paribas is secured
by first charge on all moveable and immovable properties of the Company except
Taloja plant. Foreign currency loan from Axis bank includes demand loan and term
loan which are secured by first Charge on the Fixed Assets of a subsidiary of joint
venture and current assets namely, Stock of Raw Material, Work In Progress & Finished
Goods, Stores & Spares, Bills Receivable and Book Debts of the Company and covered
by corporate guarantee isused by the Company.
(b) Term Loan from Bank 141,091 225,685
[including interest accrued and due Rs.716 (2009: Rs.1,060)]
Loan repayable within one year – Rs.84,250 (2009: Rs.84,250)
Secured against charge on all movable and immovable fixed assets of Empee Breweries
Limited and covered by a corporate guarantee issued by the Company.
Term Loan from Bank 5,571 12,296
Secured by way of hypothecation of all plant and machineries lying at factory or
elsewhere both present and future of MML, a subsidiary of the Company.
Term Loan from Bank 493,151 657,534
Loan repayable within one year – Rs. 164,384 (2009: Rs.164,384)
Secured by first charge on all moveable and immovable assets.
Term Loan from Bank 562,500 812,500
Loan repayable within one year – Rs. 250,000 (2009: Rs.250,000)
Secured by Pari-Passu charge on all moveable and immovable properties of the
Company except Taloja plant.
(c) From Banks [including interest accrued and due Rs.5,053 (2009: Rs.5,321)] 2,374,013 866,204
Amount repayable within one year – Rs.2,374,013 (2009: Rs.866,204)
Secured by hypothecation of stock in trade, stores, raw materials, book debts and a
second charge on all the immovable properties of the Company.
(d) From Others [including interest accrued and due Rs.Nil (2009: Rs.68,824)] 605,108 564,924
(e) From Rabo Finance India Private Limited 123,155 193,529
Amounts repayable within one year – Rs.70,374 (2009: Rs.70,431)
Secured by charge on all movable and immovable properties and current assets, both
present and future of the MBIL (a subsidiary of the Joint Venture) and covered by a
corporate guarantee issued by the Company.
Unsecured Loans
(i) Loans from Banks [including interest accrued and due Rs.Nil (2009: Rs. Nil)] 1,750,000* 1,750,000*
Amount repayable within one year – Rs.Nil (2009: Rs.Nil)
*Covered by personal guarantee of a Director of the Company.
(ii) From Others
Amount repayable within one year – Rs. Nil (2009: Rs.Nil) 227,195 227,195

72
Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
7. Fixed Assets:
Buildings amounting to Rs.53,030 (2009: Rs.49,619) and Plant and Machinery amounting to Rs.502,517 (2009: Rs.473,319)
are in premises not owned by the Group.
8. The Company does not own any brewing facility in Tamil Nadu, which is one of the major markets in India contributing
about 18% of the Company’s business. With an intention of ensuring supplies from Balaji Distilleries Limited (BDL), having
brewing facilities in Tamil Nadu, the Company has entered into an agreement with the promoters of BDL to secure to the
Company perpetual usage of the brewery owned by BDL, and has advanced an amount of Rs.1,550,000 to one of the
Promoter Companies of BDL, acting for and on behalf of the other Promoters also.
Subsequently, the Boards of Directors of BDL and United Spirits Limited (USL) have considered and approved a proposal for
merger of BDL into USL, which is subject to obtaining of the necessary regulatory approvals by both the Companies. The
Company has obtained a commitment from USL that the arrangement with Promoters will be adhered to on completion
of the proposed merger. The advance will be repaid upon the completion of the merger or in accordance with the terms of
the related Agreement, whichever is earlier.
In June 2009, BDL has allotted 90,000 Equity Shares upon conversion of warrants to certain parties. These parties have
entered into a supplemental agreement with the Company to the effect that they will be bound by the terms and conditions
of the earlier agreement between the Company and the promoters of BDL.

9. Capital Commitments:
Particulars 2010 2009
Estimated amount of Contracts remaining to be executed on capital account and not 257,321 689,134
provided for.

Share of joint venture:


Particulars 2010 2009
Estimated amount of Contracts remaining to be executed on capital account and not 8,896 46,348
provided for.

10. Contingent Liabilities:


Particulars 2010 2009
a) Sales Tax/other taxes demands under appeal* 14,672 14,672
b) Employee State Insurance Demand* 265 265
c) Demand towards Water charges under appeal* — 133,019
d) Excise Duty/Customs Duty demands under appeal* 36,709 36,709
e) Income Tax demands under appeal 188,844 82,262
f) Service Tax demands under appeal* 229,114 377,708
g) Claims against the Company not acknowledged as debt* 30,568 27,377
h) Letter of Credit outstanding 78,926 33,230
i) Guarantees given by the company:
- on behalf of Subsidiaries of Joint Venture to third parties
Millennium Beer Industries Limited 800,000 800,000
United Millennium Breweries Limited 600,000 600,000
Empee Breweries Limited 730,000 730,000
- to third parties 19,060 28,348
j) Letter of undertaking to distributors towards countervailing duty for imports from 38,500 38,500
Nepal

Share of joint venture:


Particulars 2010 2009
a) Sales Tax/other taxes demands under appeal [Amount paid under dispute 3,774 3,281
Rs.223 (2009: Rs.22) and disclosed in loans and advances in Schedule 10]
b) ESIC / PF demands under appeal [Amount paid under dispute Rs.Nil (2009: Rs.53) 845 898
and disclosed in loans and advances in Schedule 10]
c) Bank Guarantees given* 10,155 5,855
d) Demand towards Water charges under appeal* — 26,250

73
Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
e) Interest for delayed payment of Interest Free Loans* 1,169 4,829
f) Dividend on 1% Non Convertible Cumulative Redeemable Preference Shares 27,750 18,500
g) Income Tax# 5,055 22,028
h) Claims against the subsidiaries of the joint venture not acknowledged as debt 5,877 6,107
[Amount paid under dispute Rs.78 (2009: Rs.78) and disclosed in loans and advances
in Schedule 10]
# Net of deposit under appeal – Rs.3,789 (2009: Rs.1,018)
* In the opinion of the management, the above demands / claims are not sustainable in law and accordingly no provision
has been made in the accounts.
11. Operating Lease:
The Group has entered into leasing arrangements for vehicles, computer, equipments, office premises and residential premises
that are renewable on a periodic basis, and cancelable/non-cancelable in nature. Such leases are generally for a period of
11 to 60 months with options of renewal against increased rent and premature termination of agreement through notice
period of 2 to 3 months, except in the case of certain leases where there is a lock-in period of 11 to 26 months.

Particulars 2010 2009


Lease payments during the year including Minimum lease payments 79,594 75,134
Rs. 4,999 (2009: Rs.4,999) on non-cancellable leases.
At the balance sheet date, future minimum lease rentals under non-cancellable operating
leases are as under:
Not later than one year 17,518 28,288
One to five years 15,374 12,887
Total 32,892 41,175

12. Accounting for Taxes on Income:


Deferred Tax - The net deferred tax liability amounting to Rs. 236,114 (2009: Rs.175,963) has been arrived as follows:
Particulars 2010 2009
Deferred Tax Liability arising from:
Difference between carrying amount of fixed assets in the financial statements and the 263,445 212,987
Income Tax Return
Less:
Deferred tax asset arising from:
Expenses charged in the financial statements but allowable as deductions in future years 25,500 18,528
under the Income Tax Act, 1961
Provision for Doubtful Debts 22,141 21,783
215,804 172,676
Share of Joint venture 20,310 3,287
Net deferred tax liability 236,114 175,963
Movement during the year (60,151) (88,248)
Net Deferred tax (charged off) / written back in the profit and loss account (60,151) (88,248)
The tax impact for the above purpose has been arrived by applying a tax rate of 33.22% (2009: 33.99%) being the substantively
enacted tax rate for Indian Companies under the Income Tax Act, 1961.
No deferred tax asset has been recognised, in case of loss making Joint Venture / subsidiaries, in the absence of virtual certainty
of future profits as per the explanation provided in Accounting Standard 22 notified under the Companies (Accounting
Standards) Rules, 2006.
13. Related Party Disclosures:
A. Name of the related parties:
(1) In Associates
United East Bengal Football Team Private Limited (UEBFTPL)
(2) Entity which has significant influence
Scottish & Newcastle India Limited (SNIL)
74
Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
(3) Others:
(a) Scottish & Newcastle Plc, (S & N), Holding Company of SNIL
(b) Scottish & Newcastle UK Limited (SNUK), Fellow Subsidiary of SNIL
(c) Scottish & Newcastle India Private Limited (SNIPL), Fellow Subsidiary of SNIL

(4) Key Management Personnel (KMP):


Mr. Kalyan Ganguly
Mr. Guido de Boer (Part of the year)

(5) Relative of Key Management Personnel:


Mrs. Suparna Bakshi Ganguly (Wife of Mr. Kalyan Ganguly)

B. Transactions with related parties during the year:


UEBFTPL KMP
Particulars
2010 2009 2010 2009
Sponsorships and Other Payments 52,042 56,767 — —
Finance(including loan in cash or kind) 52,034 50,248 — —
Remuneration to Directors* — — 41,035 34,354
Amount Due From /(To) (26) (18) — —
* Kalyan Ganguly: Rs.34,266 (2009: Rs.34,354) [Including payment to relative of KMP and a firm in which such relative is
a partner - Rs.Nil (2009: Rs.2,883)].
Guido de Boer: Rs.6,769 (2009: Rs.Nil)
Figures in bracket indicate amounts received.

C. Transactions with S & N Group


i. Transaction with S & N
Management Fees Rs.45,000 (2009: Rs.Nil)
ii. Transactions with SNUK
Interest on ECB Rs.Nil (2009: Rs.17,852)
Purchase of Raw Material Rs.123 (2009: Rs.186)
iii. Transactions with SNIL
Balance of Preference Share Capital Rs.2,469,000 (2009: Rs.2,469,000)
Dividend on above Rs.74,070 (2009: Rs.74,070)
Interim Dividend on Equity Shares Rs.Nil (2009: Rs.13,499)
Final Dividend on Equity Shares Rs.13,499 (2009: Rs.Nil)

14. Earnings Per Share:


Particulars 2010 2009
a) Profit after taxation as per profit and loss account 896,376 455,792
b) Less: Preference Dividend (including dividend distribution tax thereon) 86,658 86,658
c) Net Profit attributable to equity shareholders 809,718 369,134
d) Weighted average number of equity shares outstanding 240,048,255 234,589,624
(Face value of Re.1 per share)
e) Earnings per share (Basic / Diluted) 3.37 1.57

15. Details of Dividend:


Particulars 2010 2009
Dividend payable on Preference Share Capital @3% 74,070 74,070
Dividend Distribution tax payable on above 12,588 12,588
Interim Dividend paid on Equity Shares @15% — 36,007
Dividend Distribution tax paid on above — 6,120
Final Dividend payable on Equity Shares @36% (2009: 15%) 86,417 36,007
Dividend Distribution tax payable on above 14,353 6,120
Total 187,428 170,912

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Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
16. Segmental Reporting:
The Group is engaged in manufacture, purchase and sale of beer including licensing of brands which constitutes a single
business segment. The Group operates only in India. Accordingly, primary and secondary reporting disclosures for business
and geographical segment as envisaged in AS-17 are not applicable to the Group.
17. (i) Disclosures envisaged in AS 15 in respect of gratuity are given below:
Particulars 2010 2009 2008
A) Reconciliation of opening and closing balances of the
present value of the defined benefit obligation
Obligations at the beginning of the year 157,316 144,890 118,048
Add: Transitional Obligation — — 101
Add: Current Service cost 9,902 14,268 43,745
Add: Interest cost 11,985 9,691 9,349
Add: Actuarial (gains)/ losses (500) (696) (333)
(Less): Benefits paid during the year (12,646) (10,837) (26,020)
Obligations at the end of the year 166,057 157,316 144,890
B) Reconciliation of opening and closing balances of the fair
value of plan assets
Fair Value of Plan assets at the beginning of the year 135,218 138,650 117,753
Add: Expected Return on Plan Assets 10,337 10,824 9,425
Add: Actuarial Gain (1,490) (7,776) 10,738
Add: Contributions 25,501 4,683 26,754
(Less): Benefits Paid (12,646) (11,163) (26,020)
Fair Value of Plan assets at the end of the year 156,920 135,218 138,650
C) Reconciliation of present value of defined benefit
obligation and the fair value of plan assets to the assets
and liabilities recognised in the balance sheet:
Present Value of Obligation as at March 31, 2010 166,057 157,316 144,890
(Less): Fair Value of Plan Assets as at March 31, 2010 156,920 135,218 138,650
Amount recognised in the Balance Sheet 9,137 22,098 6,240
D) Expenses recognised in Profit and Loss account under
“Employee Cost” in Schedule 15
Current service cost 9,902 14,268 43,745
Add: Interest cost 11,985 9,691 9,349
(Less): Expected Return on Plan Assets (10,337) (10,824) (9,425)
Prior period adjustment — — (23,739)
Add: Actuarial (gains) / losses 990 6,493 6,256
Net Gratuity Cost 12,540 19,628 26,186
E) Investment details of plan assets
Plan assets are invested in Government Securities, Private Sector Bonds, Managed Funds and others.
Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate
of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year
reflecting the return.
F) Actual return on plan assets 12,760 7,269 24,077
G) Assumptions
Discount rate per annum 8.00% 7.00% 8.00%
Interest rate per annum 8.00% 7.00% 8.00%
Expected return on plan assets 8.00% 7.00 to 8.00% 8.00%
Expected salary increase per annum 5.00 to 6.00% 5.00 to 6.00 % 5.00%
Attrition Rate 1.00% 1.00% 1.00%
Retirement Age 58 58 58
Mortality rate - LIC (94-96) Ultimate Mortality Table
The estimates of future increase in salary, considered in the actuarial valuation, have been taken on account of inflation,
seniority, promotion and other relevant factors such as supply and demand in the employment market.
76
Notes on Consolidated Accounts for the year ended March 31, 2010 (contd.)
Rs. in Thousands
Particulars 2010 2009 2008
(ii) Contribution to Provident and Other Funds under Manufacturing and Other Expenses (Schedule 15) includes
Rs.51,589 (2009: Rs.41,583) being expenses debited under the following defined contribution plans:
Provident Fund 38,671 30,370 29,737
Superannuation 12,918 11,213 21,111
18. (i) Pursuant to notification dated March 31, 2009 issued by the Ministry of Corporate Affairs, the Group, with retrospective
effect from April 1, 2007 changed its accounting policy in respect of exchange differences on long term foreign currency
monetary items, with the exception of exchange differences on items forming part of the Group’s net investment in a non-
integral foreign operation. Consequently, the Group has accounted for unrealised exchange losses as given below:
(a) Unrealised foreign exchange loss amounting to Rs.5,080 (2008: Rs.Nil) recognised in the profit and loss account
during the year ended March 31, 2008 has been transferred to the Foreign Currency Monetary Item Translation
Difference Account (FCMITDA) by adjusting the opening balance of the profit and loss account. Rs.10,864 (2009:
Rs.2,032) being charge for the current year is recognised in the profit and loss account under Interest and Finance
Charges (Schedule 17). Balance amount of Rs.10,864 (2008: Rs. 3,048) is retained in the FCMITDA as at the year
end.
(b) Unrealised foreign exchange gain/ (losses) as of March 31, 2010 amounting to Rs.19,064 [2009: Rs.(56,616)] is
transferred to FCMITDA. Rs.9,532 [2009: Rs.(20,904)] being gain for the current year is recognised in the profit and
loss account under Interest and Finance Charges (Schedule 17). Balance amount of Rs.9,532 [2009: Rs.(37,744)] is
retained in the FCMITDA as at the year end.
(ii) Had the Group not opted to apply the aforesaid notification, consolidate profit for the year would have been higher by
Rs. 9,532 [2009: Rs.(37,744)] , having consequential impact on the net worth of the Group.
19. All amounts disclosed in Notes to Account and other Schedules are in Rs. 000 except for:
i) Number of Shares in Notes on Schedule 1, and in Note 14.
ii) Basic and Diluted EPS in the Profit and Loss Account and in Note 14.

20. The previous year’s figures have been regrouped to conform to current year’s classification.

For Price Waterhouse Kalyan Ganguly Guido de Boer


Firm Registration Number: 007568 S Managing Director Director & CFO
Chartered Accountants

J. Majumdar Govind Iyengar


Partner Company Secretary
Membership No. F51912

Bangalore, July 21, 2010 Bangalore, July 21, 2010

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